Quinlan v Safe International Försäkrings AB

Federal Court of Australia|2005-12-20|Before: Nicholson J

THE COURT ORDERS THAT: 1. As against the first respondent: 1.1 The applicant have leave pursuant to O 8 r 2(2) of the Federal Court Rules to serve the application and amended statement of claim on the first respondent in Sweden. 1.2 Service pursuant to the leave referred to Order 1.1 be effected by service of sealed copies of the application and amended statement of claim in: (a) the English language; and (b) the Swedish language with an attached certificate of translation by a translator accredited by the National Accreditation Authority for Translators and Interpreters. on the first respondent at Annedalsvägen 9, 227 64 Lund, Sweden or elsewhere in Sweden. 1.3 The costs of seeking leave to serve the application and statement of claim on the first respondent out of the jurisdiction be the applicant's costs in the cause. 2. As against the second respondent: 2.1 On or before 10 February 2006 the second respondent file and serve a defence to the amended statement of claim. 2.2 On or before 17 February 2006 the applicant file and serve any reply to the defence of the second respondent. 2.3 On or before 23 December 2005 the applicant file and serve a reply to the second respondent's request for particulars. 2.4 There be no order as to the costs of the hearing on 27 October 2005 as between the applicant and second respondent. 3. There be a further directions hearing on 8 March 2006 at 9.30 am. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT 1 The applicant seeks leave pursuant to O 8 r 2(2) of the Federal Court Rules to serve an application and statement of claim on the first respondent in Sweden and other and related orders. Following the hearing of the application for leave, the applicant has filed an amended statement of claim. 2 Initially the orders as sought envisaged service on the first respondent would be effected by service on the second respondent and an order to the second respondent to forward the originals of the application and statement of claim to the first respondent. However the evidentiary basis on which that course of action was proposed proved not to be sustainable during the course of the hearing. 3 The application is supported by an affidavit of the applicant sworn on 14 October 2005 ('the Affidavit').

nature of the claims 4 The nature of the applicant's claim against the first respondent ('SAFE') is summarised as follows. 5 A claim for benefits under an insurance policy entitled 'Camp Counselors USA Work Experience USA' ('the Policy'). 6 A claim for benefits under the Insurance Contracts Act 1984 (Cth) and the Insurance Contracts Regulations 1985. 7 A claim for relief under the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act') or the Trade Practices Act 1974 (Cth) in respect of unconscionable conduct by SAFE concerning the Policy. As to the ASIC Act, it is submitted that an insurance policy is a 'financial product'. 8 A claim for relief under the ASIC Act or the Trade Practices Act in respect of future representations made by the second respondent ('CCUSA') (and for which SAFE is responsible) concerning the Policy. Again, as to the ASIC Act, it is submitted that an insurance policy is a 'financial product'. 9 A claim for breach of a term of the Policy implied by s 12ED of the ASIC Act or s 74 of the Trade Practices Act. Once again, as to the ASIC Act, it is submitted that an insurance policy is a 'financial product'.

ORDER 8 OF THE FEDERAL COURT RULES 10 In relation to the relevant provisions of O 8 of the Federal Court Rules, the starting point is the discretion conferred by O 8 r 2(2). The elements of O 8 r 2(2) are: (a) The Court has jurisdiction. (b) The applicant can bring her claims within one or more of the various types of case referred to in O 8 r 1. (c) The applicant has a prima facie case for the relief sought: The Affidavit verifies the facts alleged in the statement of claim ('the SOC') and the SOC shows a prima facie case. 11 The applicant relies on O 8 r 1(aa), (ab), (b), (c), (g) and (l). 12 The applicant has, and has always had, a close connection with Australia. 13 SAFE would appear to be a company conducting business from an address in Sweden. 14 CCUSA is incorporated in Australia and has its registered office and principal place of business in New South Wales. CCUSA conducts business in Australia. 15 Both the SOC and the Affidavit show that the insurance made available by SAFE was part of the 'package' which CCUSA marketed in Australia. The front cover page of the Policy contains the words 'Camp Counselors USA' and 'Work Experience USA'. There is no reference to SAFE. The back cover page of the Policy refers to SAFE and bears SAFE's logo and contact details (in Sweden). There is no reference to 'Camp Counselors USA' or 'Work Experience USA' on the back cover page. 16 I agree with the applicant's submission that it is reasonable to infer for the purpose of the interlocutory application the following: (a) As a part of the 'package' CCUSA offered travel insurance. (b) CCUSA held a SAFE travel insurance 'master policy'. The Policy defines 'Policyholder' as 'the company or organisation holding a contract with the insurance company for the purpose of providing insurance coverage to participants in its arrangements or programs'. (c) CCUSA notified SAFE that a participant in CCUSA's program was to be added as a beneficiary to that policy. The Policy defines 'Insured' as 'a participant in the policyholders arrangements or program for whom premium has been paid and whose name has been reported to the insurance company'. 'Insurance period' is defined in the Policy as 'from the time of departure from the insured's home until the time of the insured's return to home but maximum the time for which the premium has been paid'. 17 The SOC shows that all of the applicant's dealings with CCUSA took place prior to the applicant travelling to the USA. The applicant has sworn to the truth of such dealings. 18 SAFE operates on a world wide basis. This is said in the Policy under the heading 'Assistance and filing of claims'. 19 For O 8 purposes, 'contract' is used in a broad and non-technical sense. See PE Nygh & M Davies, Conflict of Laws in Australia, 7th edn, Lexis Nexis Butterworths, Australia, 2002 at [4.32]. Thus, it does not matter that the applicant's claim to benefits under the Policy might be considered akin to a claim under a deed poll. 20 Order 8 r 1(aa) provides for service out: 'where the proceeding is founded on a breach in the Commonwealth of a contract, wherever made, whether or not the breach is preceded or accompanied by a breach, wherever occurring, that renders impossible the performance of any part of the contract which ought to be performed in the Commonwealth; …' PE Nygh & M Davies, Conflict of Laws in Australia, say at [4.45] and at [4.46] (footnotes omitted): '… Where the breach is non payment of a debt, the place of performance is the place where the payment is to be made. If no such place is prescribed, the court must construe the contract, taking into account as one of the relevant factors the residence or place of business of the creditor. ...' ' This subhead also includes quasi-contractual obligations. The failure to perform such obligations occurs when payment is not made at the place of residence or business of the person to whom the debt is due. ...' 21 Most (but not all) of the applicant's medical expenses were incurred in Australia. Further, the claim for a lump sum payment in respect of permanent impairment was made while the applicant was in Australia. Had SAFE performed its obligations to the applicant under the Policy, SAFE would have sent cheques to the applicant in Australia (probably payable in Australian currency). On this analysis the place of performance and hence of breach is the place where the money is to be sent - ie Australia. 22 Order 8 r 1(ab) provides for service out: 'where the proceeding: (i) is for the enforcement, rescission, dissolution, rectification or annulment of a contract; or (ii) otherwise affects a contract; or (iii) is for damages or other relief in respect of the breach of a contract; and the contract: (iv) is made in the Commonwealth; or (v) is made on behalf of the person to be served by or through an agent carrying on business or residing in the Commonwealth; or (vi) is governed by the law of the Commonwealth or of a State or Territory;' Applying that provision here: (a) The Policy is a contract. See above at [19]. (b) The conduct of the applicant and CCUSA pleaded in SOC at [19]-[38] and [41]-[43] involves the formation of a contract through the agency of CCUSA for the purposes of O 8 r 1(ab)(v). (c) The Policy is governed by Australian law. 23 If Australian law is the proper law of the Policy, then by virtue of s 8 of the Insurance Contracts Act, that statute applies to the Policy. Australian law does apply: see below. Thus O 8 r 1 (b), (c) and (l) of the Federal Court Rules can be relied upon in respect of the claims. These provide for service out: '(b) where the proceeding is founded on a breach of an Act, where the breach is committed in the Commonwealth; (c) where the proceeding is founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth; … (l) where the proceeding concerns the construction, effect or enforcement of an Act or a regulation or other instrument having or purporting to have effect under and Act;' 24 Order 8 r 1(g) provides for service out: 'where the proceeding is properly brought against a person served or to be served in the Commonwealth and the person to be served outside the Commonwealth is properly joined as a party to the proceeding;' Order 8 r 1(g) ought to be approached on the hypothesis that SAFE as well as CCUSA is in the jurisdiction. If, on that hypothesis it would have been proper to join the claims against both respondents in the one application, then O 8 r 1(g) applies. See Costa Vraca Pty Ltd v Bell Regal Pty Ltd [2003] FCAFC 305 at [17]. The application has properly named both CCUSA and SAFE as respondents. See the SOC at [93]-[94]. 25 Order 8 r 1(n) prevents 'tacking' on to claims which fall within one or more of pars (a)-(m) of O 8 r 1 claims which do not. As Giles J said in News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553 at 557 in respect of the equivalent provision of the New South Wales Supreme Court Rules: 'Where there are multiple claims, each of the claims must come within one or more of the paragraphs, and a plaintiff cannot proceed against the foreign defendant on claims not falling within a paragraph'. Nothing in the SOC infringes this principle.

DISCRETION TO PERMIT SERVICE OUT 26 Even if the elements of O 8 r 2(2) are made out, a grant of leave thereunder is discretionary. In the exercise of that discretion, the Court can take into account whether the proceedings might subsequently be stayed on forum non conveniens or other grounds. See Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 564 per Mason CJ, Deane, Dawson and Gaudron JJ. 27 Service out of the jurisdiction should be approached by the courts with circumspection. It is an exceptional measure. See ICI Operations Pty Ltd v Kiddle-Graviner Ltd [1999] WASCA 65 at [2] per Kennedy J. The court will not be satisfied on slight material. See PE Nygh & M Davies, Conflict of Laws in Australia, at [4.23]. 28 The Policy provides, under the heading 'Applicable law': 'This insurance is issued by SAFE ... and it is effective world wide. Swedish legislation regarding insurance contracts shall always prevail and any dispute arising out of this insurance shall be settled according to Swedish law and by a public court of law in Sweden.' 29 The applicable law under Australian choice of law rules is a factor in the exercise of the discretion. See John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 521, at [25]. For reasons set out below Australian law applies. A forum clause is also relevant to the exercise of discretion. See Voth at 564. For reasons set out below, in this case the forum clause is not determinative.

THE POLICY AND AUSTRALIAN INSURANCE CONTRACTS LAW 30 If Australian law applies, the applicant's rights against SAFE are governed not only by the terms of the Policy, but also the Insurance Contracts Act and the Insurance Contracts Regulations. That legislation contains general provisions relating to insurance contracts and also provisions specifically dealing with travel insurance. The relevant provisions include ss 7, 13, 35, 48, 52, 53, 54, 57 and rr 2(1), 25, 26, 28(3), 29 and 32. 31 Simply put SAFE is the insurer. The 'Insurance Company' in the Policy is defined as SAFE and the policy contains a phrase 'This insurance is issued by SAFE' as cited above. The definition of the word 'Policyholder' does not in its terms refer to CCUSA, but given the cover page of the Policy, it is reasonable to assume CCUSA is the 'Policyholder'. The definition of the word 'Insured' does not in terms refer to the applicant or the work experience program in which she participated. Even so, it is reasonable to assume the applicant is an 'Insured'. 32 If the applicant and SAFE are not treated as 'direct contracting parties', then the issue of privity of contract arises. The parties to the Policy are said to be SAFE (as the insurer) and CCUSA (as the policyholder) and that although the applicant is a beneficiary of the Policy (because she falls within the definition of 'Insured'), she was not a contracting party. Even if that is so, the applicant can still claim under the Policy. See s 48 of the Insurance Contracts Act. Section 20 of the Insurance Contracts Act emphasises the applicant does not have to be referred to in the Policy by name. 33 Section 35 of the Insurance Contracts Act provides that where a claim is made under a 'prescribed contract' and the event which gave rise to the claim is a 'prescribed event', then the insurer must pay the 'minimum amount' in respect of the claim unless the insurer had notified the insured of certain matters or the insured knew or ought reasonably to have known of those matters. Travel insurance is one of the 'prescribed contracts'. Section 35 is 'fleshed out' by the Insurance Contracts Regulations. 34 Section 54 of the Insurance Contracts Act regulates the extent to which an insurance company can rely on its strict rights under the terms of the insurance contract. In the present case, s 54 would come into play if SAFE relied on notification or other provisions of the Policy in order to avoid or reduce a claim by the applicant under the Policy. If SAFE was not prejudiced by any (assumed) breaches by the applicant of such provisions of the Policy, then, by virtue of s 54, SAFE may not rely upon such provisions. 35 Section 57 of the Insurance Contracts Act provides for the payment of interest by an insurer to an insured in respect of delayed payment of benefits under an insurance policy. Section 57 excludes any other law that would apply in this case, s 32 of the Supreme Court Act 1935 (WA) for insurance contract purposes. Regulation 32 gives a formula for the calculation of the interest payable under s 57. 36 Section 52 of the Insurance Contracts Act prevents contracting out. Section 52 is reinforced by s 53.

PROPER LAW OF THE POLICY 37 When an Australian court selects a non-Australian lex causae it does so in the application of Australian, not foreign law. While the content of the law to be applied to the resolution of the parties' dispute may be foreign, the law governing the selection process is determined by Australian choice of law rules. See Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 517, at [67] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 38 The proper law of a contract ('the proper law issue') is different from the jurisdiction in which any dispute arising out of the contract can be litigated ('the jurisdiction issue'). The High Court has emphasised the distinction between the proper law issue and the jurisdiction issue. See John Pfeiffer Pty Ltd v Rogerson at 521, at [25] and Regie Nationale des Usines Renault SA at 498, at [7] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 39 The applicant relies on s 8 of the Insurance Contracts Act to override the applicable law clause of the Policy quoted above. According to Toohey, Gaudron and Gummow JJ in Akai Pty Ltd v The People's Insurance Company Ltd (1996) 188 CLR 418 at 437: 'Section 8 then presents the question whether, viewing the matter objectively, the law of a State or a Territory is that in which the Policy has "its natural seat or centre of gravity".' 40 In Akai Pty Ltd, cl 9 of the insurance policy provided: 'This policy shall be governed by the laws of England. Any dispute arising from this policy shall be referred to the Courts of England'. The Court was unanimous in holding that s 8(2) of the Insurance Contracts Act required the first sentence of cl 9 to be disregarded in the determination of the proper law of the policy. This was because the first sentence of cl 9 was plainly 'an express provision to the contrary' within the meaning of s 8(2). The difficulty was the interaction of the second sentence of cl 9 with s 8(2). 41 According to Dawson and McHugh JJ, s 8(2) had no application to an exclusive jurisdiction clause, save possibly to the extent that such a clause gives an indication as to the choice of law made by the parties. On the other hand, the majority (Toohey, Gaudron and Gummow JJ at 436) held that s 8(2) did apply to the second sentence of cl 9 - ie the exclusive jurisdiction clause. 42 The judgment of Toohey, Gaudron and Gummow JJ at 437 gives some indication of the type of factors the Court will take into account in determining the proper law of an insurance contract after the requisite clauses have been disregarded: 'In answering that question, it is proper to have regard to a number of matters including the places of residence or business of the parties, the place of contracting, the place of performance, and the nature and subject matter of the contract. We have referred to some of these matters earlier in these reasons. The Policy was the product of negotiations conducted by communications between Sydney and Singapore. But the Policy had no practical connection with Singapore except that the insurer happened to be a Singaporean company. The Policy had no factual connection at all with England. On the other hand, the risk was very substantially situated in New South Wales. The debts insured against arose from goods supplied by Akai to Norman Ross in Australia. By Endorsement No 1 to the Policy, the only countries covered under the Policy were identified as Australia and New Zealand. The maximum liability was stated in Australian currency, and this also was the "Policy Currency". In our view, the State of New South Wales contained the system of law with which the contract of insurance comprised in the Policy had the closest and most real connection. Accordingly, s 8 of the Act operated to render it applicable to the Policy.' (citations omitted) 43 It is necessary to ask to what system of law does the Policy have the 'closest and most real connection'? Assuming the Policy was printed without the applicable law clause quoted above, what would be the proper law of the Policy? The purpose of the arrangement constituted by the Policy (from the point of view of SAFE, CCUSA and the applicant) was to provide benefits to the applicant whilst travelling from Australia to the USA and back home to Australia. The applicant submits that purpose of the Policy provides a close connection to Australia. The applicant also submits that an even closer connection is established because the applicant 'signed on' for the Policy by signing forms whilst in Australia. I accept these submissions of the applicant for the purposes of the interlocutory application.

IMPACT OF EXCLUSIVE JURISDICTION CLAUSE 44 A choice of forum clause is different from a choice of law clause. Whether or not s 8(2) of the Insurance Contracts Act requires the reference to Swedish law in the clause quoted above to be disregarded, and regardless of the proper law of the Policy, the words 'any dispute arising out of this insurance shall be settled ... by a public court of law in Sweden' still have relevance in Australian law. 45 An exclusive jurisdiction clause does not deprive an Australian court of jurisdiction to try the dispute. See Akai Pty Ltd at 444 - 445. Nonetheless, an Australian court entertaining a stay application begins with a disposition in favour of a stay. See Akai Pty Ltd at 427 and at 445 and Incitec Ltd v Alkimos Shipping Corporation (2004) 206 ALR 558 at [47]. 46 In Akai Pty Ltd the exclusive jurisdiction clause was the subject of negotiation and compromise between the insured and the insurer. In the present case the applicant had to either 'take it or leave it'. There is authority to suggest that in a consumer situation the Court should not place as much weight on an exclusive jurisdiction clause in determining a stay application as would be placed on such a clause where there was negotiation between business people. See Sohio Supply Co v Gatoil (USA) Inc [1989] 1 Lloyd's Rep 588 at 591-592 and Incitec Ltd at [50]. 47 In Akai Pty Ltd Dawson and McHugh JJ at 428 pointed out that an Australian court, despite a disposition in favour of granting a stay so as to enforce an exclusive jurisdiction clause, nonetheless may refuse a stay on strong grounds. Their Honours quoted with approval the judgment of Brandon J in The 'Eleftheria' [1970] P 94 at 99. A mere balance of convenience is not enough to overcome the disposition in favour of a stay: The 'Eleftheria' at 103. 48 The factors which might lead a court to decline a stay despite an exclusive jurisdiction clause were considered in World Firefighters Games Brisbane, 2002 v World Firefighters Games Western Australia Incorporated & Ors (2001) 161 FLR 355. Philippides J said at [13] referred to The 'Eleftheria': 'In The Eleftheria, Brandon J summarised the considerations to be taken into account in exercising the discretion to stay proceedings commenced in breach of a foreign exclusive jurisdiction agreement. These considerations are subject to the important qualification that the court should take into account the circumstances of the particular case. Accordingly, none of the specified considerations are conclusive, and one consideration may outweigh another. The considerations are as follows: (a) in which country the evidence on the issues or facts is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the forum and the foreign courts; (b) whether the law of the foreign court applies and if so, whether it differs from the law of the forum in any material respects; (c) with which country the parties are connected and how closely; (d) whether the defendants genuinely desire trial in the foreign country, or are seeking only procedural advantage; (e) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time bar not applicable in the forum; or (iv) for political, racial, religious, or other reasons be unlikely to get a fair trial.' 49 Applying those factors to the present case: (a) Factor (a) favours the applicant. The applicant's treating medical practitioners are all based in Western Australia - as is the applicant. It is true that some of the relevant witnesses and medical records are located in The Bahamas - but given SAFE is based in Sweden rather than The Bahamas, no great weight ought be given to that matter. (b) If Australian law is the proper law of the Policy after the 'notional deletion' (by s 8 of the Insurance Contracts Act) of the clause quoted above, then factor (b) favours the applicant. If Swedish law does not apply, then it is difficult to see the advantage to SAFE of the applicant being forced to litigate in Sweden - in which case factor (d) would favour the applicant. (c) Factor (c) favours the applicant. The applicant's attachment to Australia is closer than SAFE's attachment to Sweden. SAFE is a 'world wide player' that chose to have a USA based claims manager for accidents in the USA and a Danish claims manager (ie SOS International) for accidents anywhere else in the world. (d) The applicant would be put to the expense of herself and her Western Australian medical witnesses travelling to Sweden and obtaining accommodation in Sweden. (e) The disposition in favour of enforcing an exclusive jurisdiction clause is not as strong in this case as it would be in other cases by virtue of the matters referred to above in relation to the applicant having to take or leave the Policy. (f) An important factor, which should overcome the pre-disposition of the Court in favour of a stay, is whether a protective Australian statute would be avoided by forcing the plaintiff to sue in the courts of the nominated jurisdiction. See Commonwealth Bank of Australia v White [1999] 2 VR 681 per Byrne J. In subsequent related proceedings - viz Society of Lloyd's v White [2004] VSCA 101 - Buchanan JA (with whom Winneke P and Eames JA agreed) summarised at [6] (footnotes omitted) the application before Byrne J and the appeals therefrom: 'On 29 January 1999, Lloyd's applied to stay the third party proceedings, relying on the exclusive jurisdiction clauses in the undertaking. Byrne J refused to stay the proceeding. He held that prima facie White should be held to his bargain and bore the onus to show strong cause why the discretion to stay the proceeding should not be exercised, but concluded that he had discharged the onus. His Honour said that it was undesirable that an exclusive jurisdiction clause should circumvent statutory protection for investors and against misleading or deceptive conduct and one of the issues in the case was the impropriety of Lloyd's in introducing an exclusive jurisdiction agreement into its contractual relationship with White. The Court of Appeal refused leave to appeal against the decision of Byrne J and the High Court refused special leave to appeal against the decision of the Court of Appeal.' (emphasis added) 50 The Insurance Contracts Act, by virtue of s 8 thereof, applies to the Policy. Accordingly the protective factor in the Australian statute strongly favours the ability of the applicant to sue in an Australian court - assuming that a Swedish court would not apply the Insurance Contracts Act to the Policy.

IMPACT OF FORUM NON CONVENIENS 51 The test for a stay of proceedings on the ground of forum non conveniens has been held to be that stated by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197. See Voth at 564-565. In Oceanic Deane J said at 247-248: 'That power [to stay on inappropriate forum grounds] is a discretionary one in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment and, to a significant extent, matters of impression. The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him.' 52 The lex causae to be applied to the dispute between the parties, which is selected by reference to choice of law rules, is a significant factor on an application for a stay on the ground of forum non conveniens. That having been said, an Australian court is not a clearly inappropriate forum for forum non conveniens purposes merely because the choice of law rules which apply in Australia require the Australian court to apply foreign law as the lex causae. See Regie Nationale des Usines Renault SA at 521, at [81] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. Indeed, it was held in Regie Nationale des Usines Renault SA that although New Caledonian law applied to the tort, the action commenced by the plaintiff in the Supreme Court of New South Wales should not be stayed. 53 The applicant has demonstrated that she has good arguable grounds to resist any stay application based on the Swedish forum clause. Thus, the applicant can also resist a stay application by SAFE based on forum non conveniens. The factors which assist the applicant in resisting the forum clause application demonstrate that Australia is not a clearly inappropriate forum for the purposes of a forum non conveniens application.

TIME LIMITS FOR MAKING CLAIMS and SUING 54 The last clause on p 15 of the Policy provides: 'GENERAL EXCLUSIONS This insurance will not pay for: Claims made under the insurance later than 3 years from when the insured gained knowledge of the claim, or, at the latest, 10 years from the earliest possible time of filing the claim. Claims where coverage has been denied and suit is not brought against the insurance company within 6 months from denial of coverage.' 55 This clause imposes two different time limits in respect of two different situations: (a) a three or ten year time limit for making a claim on SAFE; and (b) a six month time limit for suing SAFE to enforce a claim. Those provisions pose no difficulty to the applicant. In any event, s 54 of the Insurance Contracts Act may render them otiose.

JURISDICTION OF THE FEDERAL COURT 56 Section 39B (1A) of the Judiciary Act 1903 (Cth) provides: 'The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter: (a) in which the Commonwealth is seeking an injunction or a declaration; or (b) arising under the Constitution, or involving its interpretation; or (c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter.' 57 The interaction of s 39B(1A) of the Judiciary Act and the Insurance Contracts Act was considered by the Full Court in Elders Ltd v Swinbank (2000) 96 FCR 303. In that case the plaintiff had relied on the South Australian cross vesting legislation to confer jurisdiction on the Federal Court. The trial judge determined a number of preliminary issues adverse to the defendant. The defendant sought leave to appeal to the Full Court. By that time the High Court had given its decision in Re Wakim; Ex parte McNally (1999) 198 CLR 511 that State Parliaments could not confer State jurisdiction on federal courts. The plaintiff (respondent in the Full Court) cross-applied to the Full Court for leave to amend its statement of claim to expressly rely on s 13 and s 57 of the Insurance Contracts Act. 58 An issue in the Full Court was whether s 13 and s 57 of the Insurance Contracts Act had been raised such as to attract federal jurisdiction even though those provisions were not expressly mentioned in the plaintiff's statement of claim. In the course of dealing with that issue, Drummond, Sundberg and Marshall JJ observed it was common ground that had the statement of claim expressly pleaded the Insurance Contracts Act in the first place, the Federal Court would have had jurisdiction to deal with the claims under that statute and also any connected common law and equitable claims. Their Honours at 305, at [4] accepted that as a correct statement of the law: 'At the forefront of the applicants' submissions was the contention that even without the amendment sought to the statement of claim, the applicants' entitlement to interest under s 57 of the Insurance Contracts Act was raised as an issue in the action from the outset, in a way sufficient to require the Court to make a determination on it. Accordingly, and quite apart from the cross-vesting legislation, it was said this Court has always had jurisdiction under s 39B(1A) of theJudiciary Act1903 (Cth) to determine the whole action. It is common ground between the parties that this claim to interest is one that arises under a law of the Parliament and so is within this Court's original jurisdiction under s 39B(1A)(c) of the Judiciary Act; it is also common ground (and there is no reason to doubt) that if such a claim had been expressly made in the action from the outset, this Court would have had jurisdiction to determine not only that claim, but all the non-federal claims that are made in the statement of claim, in the exercise of the Court's accrued jurisdiction.' 59 The decision of the Full Court went on appeal to the High Court; (unreported, High Court of Australia, A 43100, 13 August 2001). The outcome in the High Court is referred to in the judgment in Swinbank v Elders Ltd [2002] FCAFC 270 at [5] where French, Merkel and Gyles JJ quote the following comments made by Gleeson CJ on behalf of the Court: 'The Court is of the opinion that the Federal Court of Australia had jurisdiction to hear and determine the application for leave to amend made by notice of motion dated 17 November 1999 and that if the amendment was granted, the Federal Court would have jurisdiction to hear and determine the whole matter, including the application for leave to appeal against the decision of Justice Mansfield. Because the respondent insurers do not now oppose the making of the amendment sought and will consent to its making, it is unnecessary to consider whether, as it is contended in this Court, the Federal Court otherwise had jurisdiction.' 60 The Swinbank v Elders Ltd litigation supports the proposition that s 39B(1A) of the Judiciary Act is 'triggered' by specifically pleading an entitlement to interest under s 57 of the Insurance Contracts Act. Further, the other provisions of the Insurance Contracts Act and the Insurance Contracts Regulations which have been pleaded in SOC at [81] and at [101]-[108] also 'trigger' s 39B(1A) of the Judiciary Act. If SAFE pleads certain defences, and the applicant pleads a reply based on s 54 of the Insurance Contracts Act to overcome SAFE's pleas, then s 39B(1A) of the Judiciary Act will also be 'triggered'. 61 Once the Federal Court's jurisdiction is properly invoked, that court has 'accrued jurisdiction' to deal with any related State law claims. The jurisdiction of the Federal Court is not restricted to the determination of the federal claim but extends beyond that to the litigious controversy between parties of which the federal claim forms part. See Re Wakim at 583-584, at [135] per Gummow and Hayne JJ. 62 Even if s 8 of the Insurance Contracts Act does not require that statute to be applied to the Policy (because the proper law of the Policy is Australian law), so long as a claim under a federal statute is made bona fide, the Federal Court retains jurisdiction. In BP Australia Pty Ltd v Nyran Pty Ltd [2004] FCAFC 163 the federal claims were withdrawn at trial, and the trial was concerned only with the related non-federal claims. Nonetheless, the Full Court accepted the Federal Court retained jurisdiction to deal with the non-federal claims.

conclusion 63 For these reasons I consider leave should be granted for service out of the jurisdiction. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.

Solicitor for the Applicant: Donna Percy & Co (at time of hearing Malcolm Hall)

Date of Hearing: 27 October 2005

Date of Judgment: 20 December 2005

Trade Practices Act 1974(Cth)s 74

Insurance Contracts Act 1984(Cth)ss 7, 8, 13, 35, 48, 52, 53, 54, 57

Judiciary Act 1903(Cth)s 39B(1A)

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