Consideration and resolution
27 The Conformity clause is concerned with the construction and interpretation of the policy. On its face, it is not intended to be a clause directed to the substance of coverage, though, of course, it may affect the limits of cover by the processes of construction and interpretation. The first five sentences provide for simplification of drafting and clarity of expression. The sixth sentence plainly (from its words) is directed to keeping the wording of the policy current.
28 The fact that the Conformity clause, including the sixth sentence, is concerned with construction and interpretation is important. The sixth sentence is not found in a vacuum. It is directed to the three Acts that are mentioned in the policy and to their places and contexts in the policy; that is, it is directed to the matters with which the parts of the policy deal that mention them. The reference to the duty of disclosure in the Insurance Contracts Act on page 4 of the policy is not just a reference to the Act and its name generally, but rather it is a reference to the content of the duty of disclosure within the Act: the law of disclosure. Likewise, the reference to the right of the insurers to cancel the policy within the timeframes in the Insurance Contracts Act on page 67 of the policy is not just a reference to the Act and its name generally, but rather it is a reference to the content of the right of cancellation under that Act: the law concerning cancellation. These are references to statute law: the Insurance Contracts Act, the duty of disclosure and the right of cancellation under it. There is also a reference to the Privacy Act and its amendments on page 8 of the policy, but that serves only an information purpose; it has no operative effect.
29 The appellant submits that the reference to the Quarantine Act is only a reference to that Act and to a list of diseases, the subject of the declaration. There is some force to that proposition, albeit it is a fine point. The list, however, is, as the primary judge said, a list of diseases that have been the subject of declarations pursuant to the Quarantine Act, giving the diseases a legal status under law, with important consequences. One consequence for the parties in this policy was the effect on the insured's cover. There is some incongruity in calling a list of diseases a law as the primary judge did. However, as is clear from her Honour's reasons, the context of the enquiry is not one of theoretical jurisprudence; it is a question of construction and interpretation of a clause in an insurance policy seeking to keep current the references to a statute in a part of the policy that uses the operation of the statute law in question to be the factum that limits an extension of cover. The statute gave certain diseases a status in law of being quarantinable which status removed such diseases from the agreed cover provided by the extension. The reference to the Quarantine Act is a reference to this: to the declaration of diseases as quarantinable as being diseases not included in the extension. The reference to the statute law is a reference to a statute and that part of the statute that brings some diseases under Commonwealth government control for the safety of the nation. Amendments to or replacements of the Quarantine Act includes relevantly, the amendment to, or replacement of, the Quarantine Act, or such part of it that fulfils or effects the same or equivalent function: the identification of diseases for Commonwealth government control for the safety of the nation. The Biosecurity Act plainly, in everyday parlance, replaced the Quarantine Act. Relevantly, for the operation of this part of the policy, the reference to the Quarantine Act and its declaration of diseases as quarantinable was replaced by the listing of human diseases under the Biosecurity Act.
30 The Biosecurity Act and the Quarantine Act have their important differences: see the discussion of the primary judge in Swiss Re: at [169]. But the purpose of examining the two Acts is to keep the policy, and, specifically, the qualification and scope of Extension 7, up to date. Whilst different methods were employed in the two statutes in identifying relevant diseases, the fundamental relevant aim of both the Quarantine Act and the Biosecurity Act for the identification and declaring or listing of diseases is to protect the Australian community from serious diseases requiring the exercise of Commonwealth, and not just State or Territory power.
31 One reading of the qualification to Disease Extension 7 read with the Conformity clause, recognising the presence of the word "includes", would be:
Cover under b and c under this extension of cover does not apply in respect of Highly Pathogenic Avian Influenza in Humans or other diseases declared to be quarantinable under the Australian Quarantine Act 1908 or listed diseases under the Biosecurity Act 2015 (Cth).
32 The above reading of the qualification gives emphasis to the word "includes" and adds (or, includes) the phraseology from the Biosecurity Act in addition to the reference to the Quarantine Act. That continuing contractual role for the repealed Act and the list of diseases under it may be seen to sit uncomfortably with the reasoning that the one Act replaced the other. Also, the conclusion that the long-repealed list of diseases under the Quarantine Act is maintained in Extension 7 after the addition of the list of diseases under the Biosecurity Act pursuant to the operation of the Conformity clause sits uncomfortably with the purpose of the Conformity clause being to maintain the currency of the policy wording.
33 Another way of reading the Conformity clause and the qualification to Extension 7 is to give a meaning to the Conformity clause and the word "includes" that leads to the conclusion that the words "diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908" were at the inception of cover, conformably with the altered legislative landscape, replaced by "listed human diseases under the Biosecurity Act 2015 (Cth)". In this way, because the replacement has taken place before inception of cover and there is no operative list of quarantinable diseases under a repealed statute, the Conformity clause operates to read out such irrelevancy and include the contractual equivalent in the replacing statute, thus keeping the policy wording current.
34 In different circumstances, where the Conformity clause was operating in a legislative landscape that was altered (by the replacing statute) during the currency of the policy there may be no reading out of the reference to the Quarantine Act as it was relevant and current for part of the policy period during which the insurers were on risk. In such circumstances, the Conformity clause would operate to keep the policy wording current by a reference to both lists, under both Acts.
35 It may also be necessary in another case to have regard to the terms of the repealing or amending statute for any continuing relevance of it.
36 The difference between the two approaches does not affect the result of this case. In these circumstances, to decide between them would only be relevant to a variation to the declaration made by the primary judge that is immaterial to the substantive result. The differences may, however, be of relevance to another insured and insurer in another context. On balance we favour the latter, more subtle, operation of the Conformity clause, which would lead to the order that the appeal be dismissed. That conclusion, so expressed, would leave the issue open for a more considered decision in another case in which the difference between the two approaches mattered.
37 Finally, the way we have approached the construction of the Conformity clause and the qualification to Extension 7 may be seen not to be based on characterising, as the primary judge did, the words "other diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908" as a statute law, separately from the "Australian Quarantine Act 1908". It does, however, reflect the substance of the primary judge's reasoning that the operation of the sixth sentence of the Conformity clause is to be understood by reference to the importance of the legal status of the diseases in question by operation of the Quarantine Act in respect to the content of the provision to which the statute is directed and with which it engages, to which the Conformity clause is directed.
38 Thus, we would reject the arguments underpinning the first ground of appeal to the effect that the Conformity clause does not mean that the limitation on Extension 7 includes human diseases listed under the Biosecurity Act.
39 We would reject the second ground of appeal. We do not consider the matter to be determined by asking whether there is a wide or narrow construction of the word "replacements". The statute law replaced has a particular context in the policy: certain diseases that attract Commonwealth power do not fall within the extension. If the statute law (the Quarantine Act) is amended or replaced and the same or substantially similar subject is dealt with, such will be included in the policy. The notion of substantive equivalence is catered for by the fact that the relevant statute law and the relevant part of it is that to which the relevant provision of the policy is directed. This means that the Conformity clause does not, or is unlikely to, lead to the nature of risk for which the premium is paid being open for radical variation.
40 We would also reject the third ground of the appeal. There is no textual or contextual ground to conclude that the "replacements" is limited to the repeal of statutes in force at the date of inception of the policy. The words are general and are in aid of a general purpose: the maintenance of currency of the policy wording.
41 The appeal should be dismissed. It was agreed between the parties that in these circumstances there should be no order as to costs.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop and Justices Lee and Stewart.