Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets v Icon Co - [2021] FCAFC 126 - FCAFC 2021 case summary — Zoe

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Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets v Icon Co

[2021] FCAFC 126

Federal Court of Australia (Full Court)|2021-07-20|Before: Allsop CJ, Middleton JJ

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At a glance

AI case summary

Result

mixed. Cross-appeal allowed; Liberty appeal dismissed; QBE appeal allowed; declarations and orders made that Icon obtained run-off cover under Liberty condition 15 for the Opal Tower until at least 24...

Key principles

Condition 15 of the Liberty policy, properly construed, permits the insured to give written instructions contract by contract prior to policy expiry for run-off cover that...
The definition of "Product" in the QBE policy does not extend to a completed building or its component parts (such as slabs, columns, walls or hobs) erected or installed by a...
Where parties to an insurance policy share a common intention as to its effect (contracts commencing cover including defects liability period) that is not reflected in the...

Issues before the court

Whether condition 15 of the Liberty policy could be engaged contract by contract to provide cover for the defects liability period of the Opal Tower...
Whether the Opal Tower and its component parts (slabs, columns, walls, hobs) fell within the definition of "Product" for the purpose of cl 1.2 of...
Whether the Liberty policy should be rectified to insert a contracts commencing endorsement reflecting the common intention of the parties

Plain English Summary

The Full Federal Court held that Icon's Liberty insurance policy covered the serious defects that appeared in the Opal Tower after practical completion but during the 12-month defects liability period. Condition 15 allowed Icon to notify projects one by one and obtain life-of-contract cover (including defects) by paying premium on the full contract value. The court rejected Liberty's argument that cover ended at practical completion. Icon therefore wins against Liberty without needing the policy to be rewritten. However, the QBE policy (which covered a later period) does not respond because a finished building is not a "product" under that policy's wording. The decision turns on careful reading of the insurance wordings in their commercial context and confirms that experienced brokers' and underwriters' shared understanding of how the policies would operate can support rectification if needed.

AI-generated legal information, not legal advice. Zoe can make mistakes — check the cited source, and for advice about your situation consult a qualified Australian lawyer.

Deep Dive

4,183 words · generated 24/04/2026

What happened

The Opal Tower is a 37-storey mixed-use residential and commercial building at Sydney Olympic Park constructed by Icon Co (NSW) Pty Ltd under a design-and-construct contract entered in October 2015. Practical completion was certified in August 2018, triggering a 12-month defects liability period during which Icon was obliged to rectify defects at its cost and to maintain public liability insurance until final certificate (cl 17 of the building contract). On Christmas Eve 2018, major structural cracks appeared over three floors in wall panels, floor slabs and hobs. The defects were so serious that the building was evacuated. By February 2020 Icon had incurred more than $31 million in costs, including $17 million in rectification, $8.5 million in alternative accommodation and substantial legal fees. Residents commenced a class action in the Supreme Court of New South Wales against the Sydney Olympic Park Authority, which cross-claimed against Icon.

Icon held two relevant third-party liability policies. The first was an annual policy issued by Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets for the period 20 September 2015 to 20 September 2016 (the Liberty policy). Icon had placed successive annual policies with Liberty since 2012 through its broker Austbrokers Countrywide (principal contact Mr Mark O'Reilly) and Liberty's underwriting agent Chase Underwriting Pty Ltd (principal contacts Mr Adam Burgess and later Mr Adam Bortone). The second was a later annual policy issued by underwriting members of Lloyd's Syndicates 386 and 299 for the period 20 September 2018 to 31 December 2018, for which QBE Underwriting Limited acted as managing agent (the QBE policy). Both policies were written on a "contracts commencing" basis after 2017, but the Liberty policies from 2012 to 2017 used an annual turnover structure with a run-off clause (condition 15 in the 2015/2016 wording, formerly condition 16).

Icon declared the Opal Tower project to Chase on 2 November 2015, providing full contract details including a 12-month defects liability period and an anticipated practical completion date of 10 August 2018. Austbrokers issued certificates of insurance to Icon referring to "practical completion estimated at 10th of August 2018 plus 12 months maintenance period". Chase confirmed cover "from 16th November 2015 and ending on 10th August 2018" and later issued an endorsement (signed by Liberty's Mr Daniel Hingston on 22 December 2015 but never provided to Icon) that described an "Estimated Project Period" ending at 4:00 pm on 10 August 2018. Premium was calculated on the full contract value of $154,707,111 at the agreed rate of 0.0595%. No explicit reference was made in the endorsement to the defects liability period.

When the defects manifested in December 2018, both insurers denied indemnity. Liberty contended that condition 15 provided only a true run-off facility at the end of the policy year for all incomplete contracts and that the endorsements had varied the policy to expire at practical completion. QBE contended that a completed building and its component parts were not a "product or thing" within the insuring clause for "Insured's Products Liability and/or Completed Operations". Icon sued both insurers in the Federal Court's Insurance List. The primary judge ([2020] FCA 1493) held after a five-day hearing that the Liberty policy did not respond on its terms but should be rectified to insert a contracts-commencing endorsement, and that the QBE policy did respond. Liberty appealed, Icon cross-appealed on the construction of condition 15, and QBE appealed the finding that the building was a "Product".

The Full Court (Allsop CJ, Besanko and Middleton JJ) delivered joint reasons on 20 July 2021. It allowed Icon's cross-appeal, holding that condition 15 was engaged by the November 2015 declaration and full-value premium, so that the Liberty policy continued in force until at least 24 December 2018. Rectification was therefore unnecessary, but the Court dealt with Liberty's rectification appeal on the assumption it was wrong on construction and dismissed it. QBE's appeal was allowed on the basis that a completed building is not a "Product" within the QBE policy. Orders were made declaring cover under the Liberty policy and dismissing Icon's claim against QBE. Costs followed the event.

Why the court decided this way

The Full Court's reasoning on the Liberty policy turned on orthodox principles of contractual construction applied to a commercial insurance policy. The Court began with the text of condition 15, which provided that, subject to written instructions prior to expiry, the policy would "continue in full force and effect at terms and conditions prevailing immediately prior to expiry for all incomplete contracts as at date of expiry until completion of those contracts including any testing and/or defects liability and/or maintenance periods". Additional premium was to be calculated on expiring rates applied to the value of works declared for completion after expiry. The Court rejected Liberty's submission that the clause could operate only as a single, end-of-year run-off for the whole book of unfinished business. Such a reading would produce commercial inconvenience: an insured would be forced to wait until near expiry before knowing whether it could lock in cover and premium for individual long-duration projects. A businesslike construction that gave the clause "commercial working flexibility" was preferred ([53]). Written instructions given project by project during the policy year, accumulated into a list, satisfied the clause. The premium mechanism worked harmoniously with condition 8 (adjustment of premium based on turnover) because premium was always "as agreed" and the "additional premium" under condition 15 could be additional to a deposit premium or to the turnover-based premium for the policy year.

The Court emphasised that the insuring clause itself contained no limitation to contracts entered during the policy period. Once condition 15 was engaged for a declared contract, the policy continued for the life of that contract. The endorsements did not vary that position. They were contractual documents that recorded the declaration but did not expressly limit the period of insurance. The phrase "estimated project period" was not construed as a contractual cut-off at practical completion; it was an estimate of construction duration. To read it otherwise would give Icon less cover for the same premium than condition 15 provided, an uncommercial result ([179]). The Court accepted Mr O'Reilly's evidence (corroborated by contemporaneous certificates of insurance and quotation slips) that he understood from September 2012 conversations with Mr Burgess that condition 15 (then 16) achieved the desired contracts-commencing outcome. While that evidence was not admissible on pure construction, it explained what the parties were in fact doing when they declared projects and paid full-value premium ([172]).

On rectification (dealt with on the hypothesis that condition 15 did not respond), the Court upheld the primary judge's findings that Icon (via Mr O'Reilly), Chase (via Mr Burgess) and Liberty (via Mr Hingston) shared a common intention from 2012 that the policy would respond to declared projects for their full duration including defects liability. That intention was communicated by conduct: annual quotation slips referring to defects liability, certificates of insurance, premium calculations on full contract value, and the absence of any denial by Liberty that defects cover was included. The intentions of the brokers and underwriting agents were attributed to their principals because they were the relevant decision-makers ([131], [146]). The 2017 contracts-commencing endorsement drafted by Chase and approved by Mr Hingston was accepted as reflecting the substance of the common intention. Because the mistake was as to the legal effect of the existing wording rather than the precise words to be used, the Court could fashion an endorsement that gave effect to the shared intention without requiring the parties to have agreed on its exact text ([273]).

The QBE appeal turned on the proper construction of the insuring clause (as amended by endorsement TPL008) which responded to liability "happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Products Liability and/or Completed Operations". The definition of "Product" was any "product or thing" sold, supplied, erected, repaired, altered, treated, installed, processed, grown, manufactured, assembled, tested, serviced, hired out, stored, transported or distributed by the Insured after it ceased to be in the Insured's possession or control. The Court accepted that the words were wide but held that they could not be read in isolation. When the policy was read as a whole, several contextual features pointed against treating a completed building as a "Product". First, the policy drew a clear distinction between "Construction Operations" (contracts for construction, erection, installation etc of tangible property) covered under cl 1.1 during the construction period, and "Completed Operations" (construction operations that had been completed, handed over and for which defects liability had expired). If a building were a "Product", the definition of Completed Operations would be largely redundant for buildings ([408]). Second, exclusions 5 and 6.2 applied specifically to "Products" and would, on the primary judge's construction, substantially confine the cover for Completed Operations in a way that appeared unintended. The Court rejected the primary judge's narrow reading that the exclusions could not apply to a "contract" ([415]). Third, the most apt verbs to describe what a builder does with a building are "built" or "constructed"; their deliberate omission from a list of 17 verbs was significant. "Erected" might describe some structures but was not the natural description of the multi-stage process of pouring concrete, fixing reinforcement and installing precast panels ([390]).

The Court also rejected the primary judge's reliance on Metricon Homes Pty Ltd v Great Lakes Insurance SE [2017] VSC 749. While the definitions were similar, Metricon was obiter, turned on a definition that expressly included "constructed", and concerned an exclusion clause that would ordinarily be read narrowly. Aspen Insurance UK Ltd v Adana Construction Ltd [2015] EWCA Civ 176 and Bigby v Kondra [2017] QSC 37, though not binding, illustrated that courts in comparable jurisdictions had declined to treat completed buildings as "products" in liability policies. Finally, the "gap" in cover identified by the primary judge (no cover for projects completed but still within defects liability) was not anomalous once it was recognised that earlier contracts-commencing policies (or the Liberty policy itself on the Court's construction) would respond. There was no mutual knowledge that such cover was absent, so no commercial imperative to stretch the QBE products clause to fill a supposed gap ([427]).

Before and after state of the law

Before this decision, Australian courts had accepted that annual construction liability policies could be written on either a turnover basis (covering occurrences during the policy year by reference to that year's turnover) or a contracts-commencing basis (covering occurrences during the life of contracts commenced in the policy year, including defects liability, with premium based on total contract value). Expert evidence from Mr Bovington (accepted at first instance and not challenged on appeal) confirmed that both forms were well understood in the Australian market and that contractors were usually required by head contracts to maintain liability cover throughout the defects liability period. Condition 15-type run-off clauses had been treated in earlier cases (e.g. Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390) as providing an optional extension for unfinished work at expiry, but no Full Court had squarely decided whether such a clause could be used project-by-project during the policy year to achieve contracts-commencing cover without endorsement. The primary judge had held that it could not; the Full Court reversed that view, emphasising businesslike construction and commercial flexibility ([53], [159]).

On rectification, the law was settled by Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 260 CLR 85 that clear and convincing proof of a common intention as to the effect of the document (not necessarily the precise words) is required, and that the intention of an agent with actual or ostensible authority is attributed to the principal (following Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280 and NIML Ltd v MAN Financial Australia Ltd [2006] VSCA 128). The Full Court applied those principles to a six-year course of dealing between sophisticated intermediaries, confirming that communication of intention can be inferred from conduct and shared market understanding rather than express statement ([269]).

For the QBE policy, the law on the meaning of "product" in liability policies had been influenced by English and Queensland decisions (Aspen, Bigby) that a completed structure incorporated into land is not a "product". Metricon had reached the opposite conclusion in Victoria but on materially different wording that included "constructed". The Full Court has now authoritatively held in the insurance context that a completed building erected by a contractor is not a "product or thing" where the policy distinguishes construction operations from products/completed operations and the definition omits the verbs "built" or "constructed". This narrows the scope of products liability cover for builders and shifts the focus to whether the particular head of cover (here Completed Operations) responds.

After the decision, insurers and brokers must draft or review run-off clauses with the knowledge that they can be used project-by-project to secure life-of-contract cover if instructions and premium are given. Endorsements that refer to an "estimated project period" will not be read as cutting down cover granted by the run-off clause. For products liability wordings, drafters who wish to exclude completed buildings should do so expressly; the absence of "built" or "constructed" from the list of verbs will now be taken as significant. Rectification remains available where a common intention as to effect can be shown by inference from a course of conduct, even if the precise endorsement was not seen until later. The decision reinforces the primacy of text read in context and commercial purpose but cautions against assuming anomalies or gaps without evidence of the parties' mutual knowledge.

Key passages with plain-English translation

"[53] A business-like interpretation that gives commercial working flexibility to a clause that is not on its face textually rigid would facilitate such project insurance—whether as run off properly so-called or by the ability to give whole of project cover to all contracts begun within a policy period and which are expected to be incomplete at the end of the policy period."

Plain English: The judges said that judges should read insurance clauses in a practical, commercial way. Even if the words of condition 15 look a bit clumsy, they should be read so that they can be used sensibly for individual projects rather than only at the very end of the policy year for every unfinished job at once. This makes the policy useful for builders who need certainty when they start a new project.

"[164] The words of condition 15 are not so intractable or rigid as to limit its possible use to one set of instructions, shortly prior to expiry for all unexpired contracts. The giving of instructions to identify contracts that will be incomplete at expiry of the period and the payment of premium based on the value of the whole of each contract conveniently enables an insurer to offer and an insured to take up, if it desires, a form of contracts commencing cover arising out of and rooted in an annual turnover policy."

Plain English: Condition 15 is not written in stone. It does not have to be used only once at the end of the year for every unfinished contract. You can use it project by project. If the builder tells the insurer about a new contract that will run past the policy year and pays premium for the whole job, the policy will cover that job right through to the end of the defects period. This gives both sides commercial flexibility without rewriting the policy.

"[179] No part of the endorsement purported expressly to deal with any extension of, or variation to, the period of insurance. None was necessary: such was effected by the invocation of condition 15. We consider that the primary judge erred in construing 'Estimated Project Period' and that which appears adjacent to it as a variation of the period of insurance for the contract up to, but not past, the date of practical completion."

Plain English: The endorsement did not say it was changing the insurance period. It did not need to, because condition 15 had already extended the period. The phrase "estimated project period" is just an estimate of how long the building work will take. It is not a legal cut-off that stops the insurance at practical completion. The primary judge was wrong to read it that way.

"[390] We also note that 'Insured' was broadly defined in the policy to include Icon, other members of the Icon Group, as well as sub-contractors, manufacturers and suppliers. 'Insured's Business' is similarly broadly defined and includes, for example, 'construction contractors… and all other incidental activities thereof.' In oral submissions, consistently with the evidence of Mr Clunie, Senior Counsel for Icon noted the possibility that a sub-contractor—for example, one who supplied and erected the walls on Level 16 of the Opal Tower then exited the site and left the walls under Icon's control—would make a claim for indemnity under the policy."

Plain English: The policy covered not just Icon but its sub-contractors and suppliers. The business insured was construction in the widest sense. A sub-contractor who puts up a wall and then leaves the site could still claim under the policy. That makes it even harder to say that the finished building is a "product" that Icon "supplies" after it leaves Icon's control.

"[408] If a completed building is a 'Product' for the purposes of the Policy, then the definition of 'Completed Operations' does not serve to confine the scope of cover for completed buildings, and claims arising in connection with completed buildings will be covered regardless of whether the defects liability has expired."

Plain English: If you treat a finished building as a "Product", then the separate definition of "Completed Operations" (which only kicks in after the defects period has expired) loses its point. The insurer would be on the hook for defects claims even during the defects period, which is not what the policy appears to have intended.

What fact patterns trigger this precedent

This decision will be triggered whenever a builder or construction contractor holds an annual third-party liability policy that contains a run-off clause in the form of condition 15 and seeks to rely on it for defects liability claims arising after practical completion but within the defects period. The key fact pattern is: (1) written instructions (by email, declaration or placing slip) given to the insurer or its agent before policy expiry that identify a specific contract or project that will be incomplete at expiry; (2) payment of premium calculated on the full contract value rather than annual turnover; and (3) an occurrence causing property damage or personal injury during the defects liability period. The precedent applies even if the insurer later issues an endorsement that refers to an "estimated project period" ending at practical completion, provided the endorsement does not expressly exclude defects cover. It also applies where the parties have conducted themselves for years on the basis that full-value premium buys life-of-contract cover, even if the policy wording on its face appears to be a turnover policy.

For the QBE aspect, the precedent is triggered where a liability policy contains a products/completed-operations clause with a definition of "Product" that lists verbs such as "sold, supplied, erected, installed, manufactured" but omits "built" or "constructed", and the claim concerns damage to a completed building or its structural components (slabs, columns, walls, hobs) after handover. The precedent will deny cover under the products head where the insured is a principal contractor that erects the building on site rather than supplying discrete moveable goods. It will not be triggered if the policy expressly includes "constructed" or "built" or contains an extension that brings completed buildings within products liability.

Rectification will be available on the same facts if the court finds that condition 15 does not respond but the parties shared a common intention (proved by quotation slips, certificates of insurance, consistent premium calculation on full contract value, and absence of any denial of defects cover) that the policy would respond for the full duration of declared contracts including defects. The fact that the precise endorsement was not seen until years later does not prevent rectification.

How later courts have treated it

As the judgment is only weeks old (20 July 2021), there are as yet no reported decisions that have cited or applied it. However, its reasoning is consistent with, and strengthens, earlier Full Court authority on the construction of insurance policies: see, for example, Chubb Insurance Company of Australia Ltd v Robinson [2016] FCAFC 17; 239 FCR 300 (businesslike construction avoiding commercial inconvenience) and Todd v Alterra at Lloyds Ltd [2016] FCAFC 15; 239 FCR 12 (context includes mutually known market practices). The emphasis on flexibility in run-off clauses aligns with the approach in Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390, where a similar clause was given a broad reading.

The rectification analysis follows directly from Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 260 CLR 85 and Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603. Later courts can be expected to treat the decision as authoritative on the proposition that an agent's state of mind is attributed to the principal where the agent is the relevant decision-maker, even in the equitable context of rectification. The rejection of the primary judge's view that a single judge could depart from Full Court authority on the "true rule" in Codelfa will reinforce the need for intermediate appellate courts to follow binding precedent within the same hierarchy.

On the QBE point, the decision resolves a divergence between Metricon Homes Pty Ltd v Great Lakes Insurance SE [2017] VSC 749 (Victoria) and the English and Queensland authorities (Aspen, Bigby). Future Victorian courts will be bound by the Full Court's narrower reading of "product" in a builder's liability policy. The decision is likely to be cited in any dispute concerning whether a completed structure is a "product" under an ISO or equivalent liability wording that omits the verbs "built" or "constructed".

Still-open questions

Several questions remain unresolved. First, the precise limits of "written instructions" under condition 15: must they expressly invoke the run-off clause or is a simple project declaration plus full-value premium sufficient? The Court held that the November 2015 declaration was enough on the facts, but left open whether a declaration that omitted any reference to defects liability could still engage the clause. Second, the interaction with s 54 of the Insurance Contracts Act 1984 (Cth): the Court noted that s 54 would prevent reliance on any omission to use precise wording, but did not decide the point because it was unnecessary. That issue will arise in any case where the insurer seeks to rely on a technical failure to tick a box or use the word "run-off".

Third, the boundary between a "product" and a "completed operation" in hybrid wordings that contain both expressions. The Court held that a completed building is not a product, but left open whether discrete manufactured items (for example, pre-cast panels supplied by a sub-contractor) that are later incorporated into the building remain products after incorporation. Fourth, the evidentiary threshold for inferring common intention from a course of conduct over many years: the Court accepted that a "gestalt" could be perceived from the pattern of declarations, premium calculations and certificates, but did not articulate a bright-line test for when such inference is permissible. Finally, the interaction with standard-form head contracts that require the contractor to maintain liability insurance "until the issue of the final certificate" (often after the defects period). Whether an insurer can deny indemnity on the basis that the contractor breached a policy condition by failing to obtain separate run-off cover after the annual policy expired remains open, although the Court's construction of condition 15 makes that less likely.

Gotchas: Most practitioners assume that an endorsement headed "IT IS HEREBY NOTED AND AGREED THAT THE ANNUAL THIRD PARTY LIABILITY FLOATER POLICY IS AMENDED TO INCLUDE THE FOLLOWING CONTRACT" with an "Estimated Project Period" ending at practical completion automatically limits cover to that date. The Full Court held that such language does not displace the continuation of cover effected by condition 15. Insurers who wish to limit cover must say so expressly. Another trap is assuming that because the policy is called an "annual turnover policy" it cannot respond after the policy year. Once condition 15 is engaged for a declared contract, the annual label becomes irrelevant for that contract. Brokers who fail to obtain or record clear instructions on defects liability run the risk that their client will succeed in a rectification suit against the insurer and then sue the broker for any shortfall. Finally, the decision shows that six years of consistent conduct can prove a common intention even if no one ever wrote down the words "we intend contracts commencing cover including defects". Underwriters should not assume that silence or internal file notes will protect them if their conduct is consistent with the insured's understanding.

Judgment (65 paragraphs)

[1]

Introduction 1 The two appeals, one associated notice of contention, and one cross-appeal in this matter concern the response of two insurance policies to claims made by Icon Co (NSW) Pty Ltd, the builder of the Opal Tower, a 37 storey mixed residential and commercial development at Sydney Olympic Park. 2 Icon entered into a design and construct contract (the Opal Tower Contract) in October 2015. Practical completion occurred in August 2018. The contract provided for a 12 month defects liability period. Extremely serious defects (major cracks appeared over three floors in wall panels, floor slabs and hobs, causing the evacuation of residents) manifested themselves on Christmas Eve 2018 after practical completion and during the defects liability period. The size of the problem is to be appreciated by the fact that by February 2020 Icon had paid out over $31 million as a result of the incident, including $17 million in rectification costs, $8.5 million in alternative accommodation costs and substantial legal fees. 3 In July 2019, residents commenced a class action in the Supreme Court of New South Wales against the Sydney Olympic Park Authority, which cross-claimed against Icon. 4 The proceedings brought in this Court in the Insurance List concerned the controversies that arose between Icon and its two third party liability insurers: Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets and QBE Underwriting Limited as managing agent for underwriting members of two Lloyd's syndicates. 5 None of the issues raised in the controversy concern the detail of the building work undertaken by Icon. There was no dispute between the respective parties about whether there was damage or an occurrence for each of the relevant policies. The disputes between Icon, as insured, and Liberty and QBE under the separate policies, were as to the response or engagement of the policies in question by reason of expiry of cover (as to the Liberty policy) and by reason of the defined scope of cover: whether the building was a "Product or thing" (as to the QBE policy). 6 The Liberty dispute was factually wide ranging because Icon claimed that if it was not entitled to indemnity on the written terms of the policy as properly construed, it was entitled to have the policy rectified to give effect to a common intention (the Contracts Commencing Intention) of Icon and Liberty which would provide for indemnity. 7 The factual matrix of the Liberty dispute commenced in 2012, when Icon first took out the Liberty policy covering third party liability, and reached forward to 2015, when Icon entered into the Opal Tower Contract and arranged cover for it, and eventually through to late 2018 when the claim was made and rejected. 8 The QBE dispute was in much narrower compass, concerning, as it did, the uncontroversial events towards the end of the period of the wider controversy in the taking out and proper scope of the third party liability policy issued by the Lloyd's syndicates (to which we will refer for convenience as the QBE policy). 9 The primary judge heard the matter over five days in May 2020 (using technology to hear the matter otherwise than in person). There was a significant body of documents, and a number of witnesses were cross-examined, none as to their truthfulness, but a number as to the reliability of their recollections. His Honour delivered judgment in October 2020, finding that both insurers were liable to indemnify Icon. As to Liberty, the primary judge found that, properly construed, the Liberty policy did not respond to the claim, but that Icon was entitled to an order rectifying the policy in a way that entitled Icon to indemnity. As to the syndicates represented by QBE, the primary judge found that properly construed the QBE policy responded to the claim and that Icon was entitled to be indemnified.

[2]

Our views in summary 10 As to the claim against Liberty, for the reasons that follow, we would allow the cross-appeal by Icon on the basis that in the circumstances condition 15 of the Liberty policy, properly construed, was able to be engaged and was engaged so as to entitle Icon to indemnity. That conclusion removes the need for rectification; but we have dealt with the appeal on rectification on the assumption that we are wrong on the question of construction, and because the primary judge has made orders which cannot stand consistently with the premise of cover which we have found. On this hypothesis, we would dismiss Liberty's appeal. 11 As to the claim against the underwriter under the QBE policy, we would allow the appeal.

[3]

The structure of these reasons 12 We will deal first with the Icon cross-appeal and then with the Liberty appeal and Icon notice of contention. The appeal and cross-appeal (in particular the former) call for close attention to a number of factual findings by the primary judge. The issue of rectification in the Liberty appeal calls for an understanding of events and apparent states of mind of various people over a period of six years. Some of these events and exchanges are relevant to the question of the construction of relevant provisions of the Liberty policy in the Icon cross-appeal; some are relevant to the intention of the parties to engage provisions of the Liberty policy in the Icon cross-appeal, and some are relevant to the question of rectification in the Liberty appeal. We recognise that some of the evidence may have different purposes to other evidence, and that care needs to be taken not to use evidence for a purpose that is not legitimate. 13 We will then deal with QBE's appeal. 14 We will first briefly set out some essential background facts and describe the approach and reasoning of the primary judge.

[4]

The Icon cross-appeal, the Liberty appeal and the Icon notice of contention

[5]

Background facts and the broad scope of issues 15 The Liberty policy was first issued in September 2012. Icon employed an insurance broker, Austbrokers Countrywide which arranged the policy on its behalf. Austbrokers' position as Icon's broker had been challenged by the efforts of other brokers, but it maintained the Icon account. The Liberty policy was only one insurance that Austbrokers placed for Icon in 2012 and later years. The principal actor at Austbrokers in the relevant events was Mr Mark O'Reilly. In the dealings leading up to the issue of the policy in 2012 and also in the dealings up to and including 2018, Liberty was represented by an underwriting agent, Chase Underwriting Pty Ltd. The principal actor at Chase who dealt with Mr O'Reilly at Austbrokers was Mr Adam Burgess, though sometimes Mr Adam Bortone. Both Mr O'Reilly and Mr Burgess were experienced insurance intermediaries. The principal actor in the underwriting of the risk for Liberty was Mr Daniel Hingston. 16 As explained in the expert evidence of Mr Bovington, which was largely uncontroversial, there were, and are, two approaches to the coverage of construction third party liability risks by annual policies of insurance. There could be policies based on annual turnover covering all projects on hand during the year and covering liability for damage or occurrences within the annual policy period, with premium calculated upon the turnover of the business for the policy year. An alternative was a so-called "contracts commencing" policy which covered liability for damage or occurrences in connection with building contracts commenced in the policy year, the coverage being for damage or occurrences during the life of the building contracts, which were expected to extend beyond the policy period. In such circumstances, premium would be calculated for each project by reference to the total contract value of the project: in effect the contribution to turnover of the company from that contract. 17 In the former type of arrangement, damage or occurrence needed to occur within the annual policy period and premium was referable to the turnover of the policy period. In the latter, damage or occurrence needed only to occur in the life of the building contract which commenced within the policy period and premium was referable to the total contract value of the projects commenced within the policy period. Importantly, Mr Bovington's evidence was that contracts commencing policies provided cover that included the defects liability period. 18 These different structures explain expressions in the evidence such as "dirty on / clean off" for the annual turnover type of policy and "clean on / dirty off" for contracts commencing policies. 19 The difficulties and arguments that have arisen in this matter stem from how Icon (through Austbrokers) wanted the policy wording (offered by Liberty through Chase) to work, and from how the relevant parties dealt with Icon's commercial preferences in the operation of the policy. 20 Two clauses of the Liberty policy issued in 2015 are critical, conditions 8 and 15 (the draft wording for the 2012 policy discussed between Mr O'Reilly and Mr Burges contained an almost identical condition 16, the minor variations in which no party submitted were relevant to the cross-appeal or appeal): 8. Adjustment of Premium The premium for this Policy is provisional (unless otherwise agreed) and is based on the estimated Turnover for the Period of Insurance. The Insured shall, as soon as practical after the expiry date of this Policy, declare to the Insurer(s) the Turnover during the preceding Period of Insurance. An adjustment premium shall be determined by calculating the difference between the provisional premium and the sum of the agreed rate applied to the Turnover. Notwithstanding the above, the maximum allowable return premium will be 25% of the provisional premium paid. 15. Run Off Subject to written instructions from the Insured to the Insurer(s) prior to expiry of the Period of Insurance, this Policy will continue in full force and effect at terms and conditions prevailing immediately prior to expiry for all incomplete contracts as at date of expiry until completion of those contracts including any testing and/or defects liability and/or maintenance periods. The Insured is required to provide the Insurer(s) with a list of contracts requiring Run Off and additional premium is to be calculated on expiring rates applied to value of works declared for completion of projects after expiry of the Period of Insurance. 21 They are to be read with the relevant part of the insuring clause, as follows: The Insurer(s) agree to: 1. Indemnify the Insured in respect of all amounts which the Insured shall become legally liable to pay in respect of: 1.1 Personal Injury; 1.2 Property Damage; 1.3 Interference with traffic or to property or the enjoyment of use thereof by obstruction, trespass, loss of amenities, nuisance, happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Business … 22 In the policy schedule, Premium was stated : "As Agreed". 23 A brief discussion of conditions 8 and 15 reveals the issues and contending approaches of the parties. Condition 8 provides for adjustment of premium based on the turnover of the year of insurance. A provisional premium is calculated based on an estimate of the annual turnover anticipated for that year, and immediately after the expiry of the policy period the actual turnover would be disclosed and the premium adjusted. This was "unless otherwise agreed". By the insuring clause, the insurer was liable to indemnify the insured for amounts which the insured shall become liable to pay in respect of injury, damage or interference happening during the (annual) period of insurance as a result of an occurrence in connection with the business. There was no limitation or exclusion depending on the particular contract or project or what stage the contract or project had reached: The cover was annual based on turnover for liability in respect of damage happening in the period as a result of an occurrence in the business. 24 As will be discussed, Icon through Austbrokers wanted to fix cover for each contract or project as it commenced, for the life of the contract or project. An annual turnover policy operating as described above would not have provided that life of contract or project cover. It is Icon's case that condition 15 provided the contractual framework in this policy to effect that commercial aim and that the parties, in what they did, that is in the actions they took, engaged condition 15, contract by contract, to effect contracts commencing cover such that within the terms of the policy, in each policy year, Icon obtained cover for all contracts declared in the relevant policy year for the life of those contracts, including during the defects liability periods of the contracts, given the terms of condition 15. 25 Condition 15 is entitled "Run Off". A reading of its terms reveals at least one clear contractual purpose: what might be called run off properly so-called. If at the end of a policy period of an annual turnover policy an insured wished to have all unfinished or incomplete contracts covered to their end of life, including defects liability period, whether because a new insurance programme was to be obtained requiring a "clean" position with no on-going contracts, or the insured was ceasing business or for some other commercial reason, this clause enabled the whole business ("all incomplete contracts") to be covered in run off to completion (to the end of the defects liability period) by the provision of one list of incomplete contracts and the payment of premium upon expiring rates applied to the total value of works outstanding. Liberty submitted that such was not only its plain meaning, but also it was its only meaning and the only intended operation of the condition. 26 A broader and more commercially flexible meaning or content was urged by Icon. Condition 15 was said to be able to be used, individual contract by individual contract as they were entered into, in order for there to be cover for the life of each contract for individual premiums based on the total contract value of each contract. Conditions 8 and 15 would then operate by a deposit premium being accepted and as instructions were given for individual contracts additional premium would be charged based on the total value of the contracts notified. The list of contracts required by the second paragraph of condition 15 can be taken to be the sum of the instructions given in respect of individual contracts. 27 As shall be seen, the documentation that gave effect to the parties' communications included endorsements to the policy. The place of those endorsements is central to the dispute. Liberty's position (which was agreed in by the primary judge) was that the endorsements were contractual documents which provided for the period of insurance to be extended for each contract to a nominated date being the date of practical completion, such that cover expired before commencement of the deficits liability period. 28 There was no case put by Liberty that only annual cover (as first described above) was provided. It accepted that it gave amendments to each annual policy by amending the policy to grant cover for each contract for which Icon gave instructions; but its position was that it only gave cover in respect of those contracts up to the date of practical completion of each project, or at least, relevantly, of the Opal Tower Contract. 29 It was from this position that the primary judge concluded that the parties had a mutual intention that contracts commencing coverage was intended to be given and that such a type of coverage that was intended to be given included cover for the defects liability period.

[6]

The primary judge's reasons as to contractual coverage (the subject of the cross-appeal) 30 In section B of the reasons (J[11]-[40]) the primary judge gave the relevant background to the disputes. At J[12]-[21] the primary judge summarised the pattern of the dealings between Liberty and Icon as follows: 12. Between at least 2012 and the end of 2018, Icon and the Icon Group engaged Austbrokers to act as their broker for the purpose of obtaining "Material Damage Contract Works" and "Third Party Liability" insurance for Icon and the Icon Group. The primary contact at Austbrokers was Mr Mark O'Reilly. 13. Between approximately June 2012 and July 2017, Chase was authorised to act as agent for Liberty in respect of, inter alia, the sale of third party liability insurance for the construction industry. In May 2016, Liberty and Chase executed two agency agreements, one for the period 1 June 2012 to 31 August 2015 (First Agency Agreement), and a second for the period 1 September 2015 to 1 September 2018 (Second Agency Agreement). The First and Second Agency Agreements attached policy wordings for both an annual third party liability policy and for a project specific third party liability policy. 14. Between September 2012 and September 2017, Icon and Liberty entered into several successive, and relevantly identical, 12 month contracts of third party liability insurance. As noted above, the Liberty Policy was the relevant annual policy to which Icon's claims against Liberty are concerned, which identified the "Period of Insurance" as 20 September 2015 to 20 September 2016. 15. Icon did not deal directly with Liberty in relation to its insurance programme; all communications as to the policies were between Austbrokers and Chase. Within Liberty, the person with primary responsibility for Icon's insurance programme was Mr Daniel Hingston. Mr Hingston was employed by Liberty first as a senior underwriter, and later as Assistant Vice President & Victorian Casualty Manager. 16. At the outset of the contractual dealing between Liberty and the Icon Group, in September 2012, Austbrokers, on behalf of Icon, issued Chase with a "quotation slip" seeking a quotation for both "contract works" and "liability" policies of insurance. Chase then forwarded the quotation slip to Liberty. 17. Shortly thereafter, Liberty sent an email to Chase confirming the rates which Chase could offer to Icon for annual third party liability insurance and Chase sent a quotation to Austbrokers in respect of both the "contract works" and "liability" policies of insurance. It was agreed that Chase was acting as agent of Liberty only in respect of the "liability" policy for which it provided a quotation. Chase then sent an email to Austbrokers attaching two separate policy wordings for a "contract works" policy and a "third party liability" policy and then, on 19 September 2012, Austbrokers emailed Chase to confirm that Icon had accepted the "terms". 18. During the currency of the annual insurance policies, between September 2012 and September 2017, Austbrokers "notified" Chase, usually by email, of new construction projects in respect of which Icon sought third party liability insurance cover. 19. In respect of each construction project, Chase then usually provided Austbrokers with what was referred to as an "endorsement", confirming that cover was in place in respect of each project notified. Such endorsements usually commenced with a statement substantially in the following terms: IT IS HEREBY NOTED AND AGREED THAT THE ANNUAL THIRD PARTY LIABILITY FLOATER POLICY IS AMENDED TO INCLUDE THE FOLLOWING CONTRACT, WITH AMENDMENTS DETAILED HEREIN. ALL OTHER TERMS CONDITIONS AND LIMITATIONS APPLY AS PER POLICY. 20. The endorsement then contained various matters describing the project, including an "Estimated Project Period". 21. From at least September 2013, and in respect of each subsequent annual policy, Icon paid a deposit premium which was then offset or deducted against the premium payable when projects were declared under the relevant annual policy. This was calculated and charged by reference to the full contract value of each project. Icon contends that this was the case from the outset of the first annual policy in 2012, but Liberty disputes this contention. 31 As will be seen in due course, this approach to cover, contract by contract, was discussed between the intermediaries (Mr O'Reilly and Mr Burgess) in September 2012, although the clear use of endorsements issued by Liberty did not commence until some time after commencement of the 2012/2013 policy. Importantly, in September 2012 (at least according to Mr O'Reilly whose evidence was accepted), Mr O'Reilly (Austbrokers) and Mr Burgess (Chase) discussed the use of condition 15 (then condition 16 in the draft wording for the 2012 policy before them) to effectuate a form of contracts commencing cover. That evidence was relevant to the rectification claim. Whilst it could never be relevant to the proper construction of condition 15, it was admissible, so far as relevant, to understand what the parties were doing or what they were intending to do: in this case, engage condition 15 if, on its proper construction, it was sufficiently wide and flexible to permit attachment of contracts to the policy by giving instructions, individual contract by individual contract, and paying the premium for the total value of each individual contract. 32 At J[23]-[27], the primary judge described the taking out of the relevant policy (for 2015/2016) as follows: 23. On 7 September 2015, in the customary manner by which the parties had previously conducted themselves, Austbrokers sent Chase an email attaching a quotation slip seeking terms for the renewal of the Icon Group's annual "Material Damage Contract Works" and "Third Party Liability" insurance policies for the period 20 September 2015 to 20 September 2016. 24. On 16 September 2015, Chase sent Liberty an email, attaching Icon's quotation slip, seeking approval for Chase to offer Icon third party liability cover on expiring terms. 25. On 17 September 2015, Mr Hingston sent an email in response to Chase stating that "I confirm agreement to continuation of expiring terms for the 2015-16 period". Later that day, Chase sent Austbrokers an email attaching a renewal offer, for the period 20 September 2015 to 20 September 2016, for Icon's annual third party liability insurance policy and for its annual contract works insurance policy. The renewal offer identified that Icon's annual third party liability insurance policy would be provided by Liberty for that period. 26. On 18 September 2015, Austbrokers sent Chase an email attaching a "placing slip" to confirm the renewal of both policies for Icon for the period 20 September 2015 to 20 September 2016. Later that day, Chase sent an email to Austbrokers confirming Liberty's cover for the annual third party liability insurance policy for that period, and the Liberty Policy came into effect. 27. The "Period of Insurance" is specified in the Schedule to the Liberty Policy as the period from 20 September 2015 4:00pm local standard time to 20 September 2016 4:00pm local standard time, "or any subsequent period for which the Insured has requested and the Insurer(s) has accepted renewal." 33 At J[29]-[36], the primary judge described the notification of the Opal Tower project as follows: 29. The Opal Tower Contract provided for a defects liability period of 12 months after the date of practical completion, during which time Icon was required to rectify all defects. Clause 17 required Icon to maintain public liability insurance until the issue of the final certificate under the contract, which occurred at the later of various specified events, one of which was within 28 days of the expiry of the defects liability period. 30. On 2 November 2015, Mr O'Reilly of Austbrokers sent Chase an email notifying it that Icon had been awarded the Opal Tower Contract (Opal Declaration). Mr O'Reilly's email provided particulars of the contract, relevantly including that: (a) the time period of the build was "notional start date 16th November 2015 to anticipated completion 10th August 2018"; (b) the Project had a defects liability period of 12 months; (c) the Project involved construction of 369 residential apartments over 34 storeys plus 3 levels of basement car parking; and (d) the cost value of the Project was $154,707,111. 31. Also on that day, Austbrokers sent Icon certificates of insurance, which stated the "Contract Works and Public & Products Liability" insurance had been arranged for the Project for the period of insurance from 16 November 2015 "to Practical Completion estimated at 10th of August 2018 plus 12 months maintenance period". 32. On 24 November 2015, Chase sent an email to Liberty informing it that Austbrokers had notified it of the Project "which began on 16 November 2015 and is to be included under the annual (but paid in full now)". Chase stated in that email that the "contract period" was "16th November 2015 to 10th August 2018" and that the "cost value of the project" was $154,707,111. Chase did not refer to the 12 month defects liability period in that email. 33. On 9 December 2015, Chase sent Austbrokers an email relevantly informing it that: (a) "cover" was in place for the Project "from 16th November 2015 and ending on 10th August 2018"; (b) that the base premium payable by the Icon Group for "Third Party Liability" insurance cover for the Project was calculated to be $92,050.73 (net) plus charges; (c) that "all other terms and conditions were as per the annual policy": and (d) that an endorsement would be sent to Austbrokers for its records. 34. Chase again did not make mention in that email that cover was in place for the additional 12 month defects liability period. 35. On 22 December 2015, Mr Hingston signed an "endorsement" for the Project (Opal Endorsement) which relevantly stated that: (a) IT IS HEREBY NOTED AND AGREED THAT THE ANNUAL THIRD PARTY LIABILITY FLOATER POLICY IS AMENDED TO INCLUDE THE FOLLOWING CONTRACT, WITH AMENDMENTS DETAILED HEREIN. ALL OTHER TERMS CONDITIONS AND LIMITATIONS APPLY AS PER POLICY. (b) the "Estimated Project Period" was "16th November 2015 to 10th August 2018 at 4:00pm local standard time"; and (c) the "Endorsement Premium Calculation" was based on the "Full Value of Works" of $154,707,111. 36. The Opal Endorsement was not provided to Austbrokers or Icon. 34 At J[37]-[38], the primary judge (substantially for the purpose of explaining the background for the rectification case) described wording of the 2017/2018 policy (the Contracts Commencing Endorsement). Liberty's last policy was for the 2016/2017 year. The 2017/2018 policy was placed through Chase with a syndicate of Lloyd's underwriters. The wording had a contracts commencing provision, as follows: Endorsement - TPL008 The following Endorsement forms part of the Third Party Liability Policy Number: 438396 Contracts Commencing Amendment to Policy It is hereby noted and agreed that this Policy is endorsed to include the following amendments: (A) the Schedule is amended to include: Construction Period Maximum Construction Period 24 months any one Contract Including any testing and commissioning period Maximum Maintenance/ Defects Liability Period 12 Months any one Contract (B) The Insuring Clause is amended to read as follows: The Insurer(s) agree to: 1. indemnify the Insured in respect of all amounts which the Insured shall become legally liable to pay in respect of: (a) Personal Injury; (b) Property Damage; (c) interference with traffic or to property or the enjoyment of use thereof by obstruction, trespass, loss of amenities, nuisance, 1.1 happening during the Construction Period as a result of an Occurrence in connection with the Insured's Business 1.2 happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Products Liability and/or Completed Operations (C) Condition 8 (Adjustment of Premium) is deleted and replaced by: 8. Adjustment of Premium The premium for this Policy is provisional and is based on the estimated value of works to commence during the Period of Insurance. The Insured shall, as soon as practical after the expiry date of this Policy, declare to the Insurer(s) the actual total value of works for all contracts that commenced during the Period of Insurance. An adjustment premium shall be determined by determining the difference between the provisional premium and the sum of the agreed rate applied to the actual total value of works commenced during the Period of Insurance. The adjustment premium paid to the Insurer(s) or refunded by the Insured(s) as the case may be. Notwithstanding the above, the maximum allowable return premium will be 25% of the provisional premium paid. (D) Condition 15 (Run Off Cover) is amended to read: 15. Run Off This Policy will continue in full force and effect at terms and conditions prevailing immediately prior to expiry for all incomplete contracts as at date of expiry until completion of those contracts including any testing and/or defects liability and/or maintenance periods subject to the Maximum Construction Period noted in the Schedule. On expiry of the Period of Insurance the Insured is required to provide the lnsurer(s) with a list of all Insured Contracts that commenced during the period of insurance and additional premium is to be calculated as per Condition 8 (Adjustment of Premium). Any contracts not declared to Insurers will not be covered by this Policy. (E) The following definition is deleted in its entirety: Turnover Turnover is defined as the total value of work completed during the preceding twelve months period for the Business and/or Activities of the Insured to which this Policy applies, including the value of principals supplied materials where appropriate In all other respects this Policy remains unaltered. 35 Icon's contract claim was that the invocation and engagement of condition 15 brought about the same effect for 2012-2017 as this endorsement did for 2017/2018. The primary judge disagreed with that contract argument of Icon, but concluded in the rectification claim that what had always been intended by the parties was contracts commencing coverage which extended to include the defects liability period and that such an intended effect of the policy was embodied in a form of words reflected by such an endorsement. 36 In section C of the reasons the primary judge set out the list of factual and legal issues that the parties had agreed before the hearing. The only issue relevant for the appeal and cross-appeal were the so-called Run Off Claim (regarding condition 15) and the rectification claim. Though this section of these reasons primarily concerns the contractual claim of Icon (and so the cross-appeal) it is convenient to set out the issues on rectification. The contested factual and legal issues involving Liberty were as follows: Factual issues: Run Off Claim 1 Did Icon comply with the terms of Condition 15 of the 2015/16 Liberty TPL Policy in respect of the Opal Tower project? 2 How was the premium for the 2015/16 Liberty TPL Policy calculated, and on what basis? … Rectification Claim 7. Was it the intention of: (a) Icon; (b) Austbrokers; (c) Chase Underwriting; and/or (d) Liberty, at the time of commencement of the 2015/16 Liberty TPL Policy, that the 2015/16 Liberty TPL Policy would apply during the construction and defects liability period for any projects: (i) commenced by Icon or the Icon Group during the period of insurance of the 2015/16 Liberty TPL Policy; (ii) declared by the Icon Group to Liberty; and (iii) for which an additional upfront premium was calculated by Chase (as agent for Liberty) based on the total project value and paid by the Icon Group. 8. Was a common intention to the effect set out in question 7(i) - (iii) communicated between Icon/Austbrokers and Chase Underwriting/Liberty? 9. Was a common intention to the effect set out in question 7(i) - (iii) not reflected in the written terms of the Liberty 2015/16 Annual TPL Policy? 10. Did the Contracts Commencing Endorsement, which was introduced into the 2017/18 Chase TPL Policy Wording, reflect the common intention of Icon/Austbrokers and Chase Underwriting/Liberty at the time of commencement of the 2015/16 Liberty TPL Policy? Legal Issues: Run Off Claim 11. What was the legal effect of Icon "declaring" the Opal Tower project to Liberty and what was the period of insurance obtained in respect of the Opal Tower project as a consequence? 12. On the proper construction of Condition 15 of the 2015/16 Liberty TPL Policy, did Icon and the Icon Group obtain run off insurance cover from Liberty for the Opal Tower with the consequence that the terms and conditions of the Liberty 2015/16 Annual TPL Policy continued to apply to the Opal Tower until completion of the Defects Liability Period on 8 August 2019? 13. Did the parties "otherwise agree" to calculate premiums payable under the 2015/16 Liberty Policy pursuant to Condition 8 of that policy as alleged by Liberty in paragraph 13 of its defence? 14. If the answer to question 13 is "no", would the effect of the 2015/2016 Liberty TPL Policy be that, but for s. 54(1) of the Insurance Contracts Act 1984 (Cth) (ICA), Liberty may refuse to pay the claim made by Icon by reason of Icon's failure to expressly state that it was seeking "run off" cover, being an act or omission that occurred after the 2015/2016 Liberty TPL Policy was entered into? 15. If the answer to question 15 [sic] is "yes", is Liberty prohibited from relying on any such act or omission by reason of s. 54(1) of the ICA? … Rectification Claim 19. For the purpose of rectification, which entities' conduct and state of mind are relevant? 20. Is the conduct and state of mind of Austbrokers relevant to determining Icon's intention? 21. Is the conduct and state of mind of Chase relevant to determining Liberty's intention? 22. Should the 2015/16 Liberty TPL Policy be rectified by adding the Contracts Commencing Endorsement? 37 A number of matters arise from these issues. First, factual issue 1 tends to roll up the meaning (construction) of condition 15 and execution (engagement) of condition 15 (if it was wide enough to apply). Secondly, legal issues 11-13 can perhaps be more simply expressed as factual and legal questions: Is condition 15 wide enough or apt to permit the declaration of individual contracts from their inception as covered by the relevant annual policy, and, if so, did the parties do so in such a way as to engage condition 15? 38 At J[43]-[44], the primary judge recognised that much of the evidence about the dealings between the parties concerned the rectification claim, though some of it was relevant to the surrounding circumstances of the Run Off Claim. 39 At J[45]-[46], the primary judge summarised the expert evidence of Mr Bovington as follows: 45. Evidence about the construction insurance market was given by Mr Neil Bovington, who is an insurance broker and insurance adviser with over 20 years' experience in the construction insurance sector in Australia and the United Kingdom. Mr Bovington explained that public and products liability insurance for the construction industry, when purchased on an annual basis by contractors and builders, is purchased in one of two ways, either: (a) on a "contracts commencing" basis (contracts commencing policies); or (b) on a "turnover" basis (turnover policies). Contracts commencing policies were said to provide cover for the project until works are completed plus the relevant defects liability period, even if this occurs after the annual period of insurance has expired. Turnover policies cover projects which are commenced or are on hand during the annual period of insurance (including those projects which are complete and in the defects liability period) but only during the annual period of the insurance policy. Mr Bovington observed that insurance professionals who are involved in the construction insurance market in Australia would have been well aware that contractors are required, under their construction contracts, to maintain public and products liability insurance during the construction and defects liability period. 46. Mr Bovington's evidence was relevantly unchallenged by Liberty, and I accept it. Indeed, the parties expressly agreed with the market-based circumstances prevailing at the relevant time, to the extent they were relevant. Those circumstances included that most commercial construction contracts are based upon standard form contracts prepared by Standards Australia, and that those contracts require the contractor to obtain and maintain public liability insurance for the term of the contract, including any defects liability period. The parties were also ad idem that contracts commencing policies "usually" required the payment of a premium based on the total contract value of contracts commenced during the annual policy period, and cover was provided for the duration of those contracts even if that duration extended beyond the end of that annual policy period, including any defects liability period. 40 That evidence was, of course, important for the rectification claim. It was also important as objective evidence of surrounding circumstances as to the contract and its meaning as the mutually known and understood operation of the insurance market in the construction industry (see Lord Wilberforce in Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd [1976] 1 WLR 989 at 995-996 and Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 at 350), and in aid of understanding what the parties can be taken to have been doing in effecting the contract specific cover that in some, but not all, cases was finalised or documented by the endorsements. 41 At J[47]-[49], the primary judge described the parties' use of endorsements, as follows: 47. As will be explained, there was a dispute between Icon and Liberty as to the relevance of the Opal Tower Endorsement to construing the Liberty Policy. Accordingly, it is necessary to make findings as to the parties' use of such endorsements generally. As I have outlined above (at [18]-[22]), it was agreed that since the commencement of the parties' dealings, Icon, through Austbrokers, declared to Chase, as agent for Liberty, each of its new construction projects commenced during the policy period, notifying it of the relevant contractual details. What then occurred is that Chase usually provided Austbrokers with an "endorsement" to the policy, which noted that the policy was "amended" to include the relevant building contract, and the details of that contract were then set out. A premium was then calculated and charged by reference to the full contract value of each project declared to Liberty, which was set out in the relevant endorsement. Although there was some dispute as to whether this method of calculation commenced in 2012 or 2013, it does not matter for present purposes because the premium was calculated and paid upfront upon declaration of the projects to Chase during the period of the Liberty Policy. 48. It was agreed that there were numerous endorsements prepared by Chase during the course of the parties' dealing. These endorsements, 18 of which were in evidence, included endorsements on two projects declared to Liberty immediately prior to the Project and were in substantially the same form (save that each identified a different project, named different additional insureds, identified differing project periods and included a different premium payable). 49. The Opal Tower Endorsement was signed by Mr Hingston for the Project on 22 December 2015, but it was agreed that that endorsement was never provided to Icon. However, it will be recalled that on 9 December 2015, it was agreed that Chase, in response to the Opal Declaration on 2 November 2015, had emailed Austbrokers relevantly informing it that cover was in place "from 16th November 2015 to 10th August 2018" and that an endorsement would be sent to Icon for its records. Neither this email, nor the endorsement subsequently executed by Mr Hingston, referred to the defects liability period. 42 From J[50]-[95] the primary judge dealt with the Run Off Claim. At J[50]-[51] his Honour reformulated into simple form the relevant questions, as follows: 50. Notwithstanding that the parties framed the issues for determination in relation to this claim by reference to the series of questions set out above (at [42]), the parties' submissions on each question oftentimes overlapped and it is convenient to reformulate the issues in a somewhat simpler way. 51. In relation to the Run Off Claim, broadly speaking, the following two issues fall for determination: (1) Did the Opal Declaration meet the requirements of Condition 15? (2) If Icon did not comply with Condition 15 by reason of an omission to use some precise form of wording, is Liberty precluded from denying indemnity on that basis by operation of s 54 of the ICA? 43 The first of these questions rolls up two issues: the meaning of, and the engagement of condition 15: What does condition 15 mean? And, if it was open to be engaged, was it engaged? 44 The primary judge, however, from J[52]-[90] approached this is only as a question of meaning, or at least as a question of construction. 45 The primary judge commenced with a discussion of relevant principles of construction and interpretation. In that discussion, the primary judge (in particular at J[57]-[60]) involved himself in the debate that has taken place in intermediate courts of appeal as to "ambiguity" for the purposes of the expression of the "true rule" stated by Mason J in Codelfa at 352. His Honour expressed it (at J[57]) as "whether the requirement for ambiguity expressed by the 'true rule' remains good law". Whether that was an accurate encapsulation of the debate can be left to one side. The Full Court of this Court in Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166 at 173-174 [36]-[41] expressed the view that the question of ambiguity was not to be assessed by reading the words of the contract disembodied and removed from their context. See also the later Full Courts in Chubb Insurance Company of Australia Ltd v Robinson [2016] FCAFC 17; 239 FCR 300 at 326 [103(b)] plainly referring to [73] of the judgment of Beach J in Todd v Alterra at Lloyds Ltd [2016] FCAFC 15; 239 FCR 12 at 28 [73], explicated at [74]-[75], and Federal Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust [2019] FCAFC 226; 273 FCR 567 at 580-582 [28]-[31]. The effect of what the primary judge stated at J[60] was that as a single judge sitting in the original jurisdiction he was entitled to ignore any apparent binding precedent of the Full Court and make up his own mind as to the content of the High Court authority and, if he disagreed with the Full Court's view of that, not follow the Full Court. With respect, his Honour erred in that regard. The primary judge cited a number of cases as justification for that course. None was a case of a single judge in one judicial hierarchy not being obliged to follow the appellate court of that hierarchy. All concerned whether courts of one hierarchy were bound by or should follow courts of other hierarchies. In SZGME v Minister for Immigration and Citizenship [2008] FCAFC 91; 168 FCR 487 at 501, Black CJ and Allsop J quoted with approval the observations of Lord Simon of Glaisdale in Miliangos v George French (Textiles) Ltd [1976] AC 443 at 478: It is the duty of the subordinate court to give credence and effect to the [more recent] decision of the immediately higher court, notwithstanding that it may appear to conflict with the [earlier] decision of a still higher court. The decision of the still higher must be assumed to have been correctly distinguished (or otherwise interpreted) in the decision of the immediately higher court. 46 See also Lord Hailsham LC in Cassell & Co Ltd v Broome [1972] AC 1027 at 1054; Jacob v Utah Construction and Engineering Pty Ltd [1966] HCA 67; 116 CLR 200 at 207; the discussion in Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 177-180; and Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; 165 CLR 107 at 129-130. 47 As it transpired, the primary judge considered there to be ambiguity in the text of condition 15. As will be seen, the construction of the policy and in particular condition 15 and its relationship with the balance of the policy, including condition 8, does not require discussion of the "true rule" as expressed by Mason J in Codelfa, or any debate concerning it. 48 The primary judge examined the Liberty policy "in its terms" at J[65]-[74], before his Honour turned to the "extrinsic materials of surrounding circumstances" at J[75]-[89]. 49 The primary judge saw four aspects to condition 15 and described them in [65]: 65. Although somewhat clumsily drafted, on its face, Condition 15 contains four aspects that should be noted: first, if run off cover is obtained, the cover provided will continue past the expiry date of the Liberty Policy (being 4pm on 20 September 2016), in its then current form, for "all" incomplete contracts until their completion, including the defects, testing and/or maintenance liability periods in place for those contracts; secondly, is the requirement for "written instructions" to obtain that cover and the requirement in the second paragraph whereby "[t]he Insured is required to provide the Insurer(s) with a list of contracts requiring Run Off"; thirdly is that those instructions must be provided "prior to the expiry of the Period of Insurance" (again, being 4pm on 20 September 2016) and no further temporal element is specified; and fourthly, the "additional premium" is to be calculated on "expiring rates" applied to the value of works "declared" that are to be completed after the period of insurance. 50 Icon submitted to the primary judge and to this Court that these considerations collapsed into two elements: (1) written instructions prior to expiry identifying contracts requiring run off; and (2) payment of premiums on expiring rates applied to the value of works. It said it complied with both: see J[66]. 51 Liberty submitted that the clause was never engaged and could not be engaged in the way it was. The condition did not apply for inception of individual contracts. What the clause provided for was a "list" of all unexpired contracts at the end of the policy period for run off: a single notification for all projects requiring run off. That is, the clause was intended only to operate to provide run off properly so-called. The primary judge expressed the argument of Liberty as follows, at J[68]: … The submission was developed by reference to an attack on Icon's interpretation of the clause, being that the only temporal limitation on the notification was that it occur "prior to expiry of the Period of Insurance". Liberty said that such a broad construction would produce the result that it is possible to acquire run off cover even before the relevant annual policy took effect and, further, before a relevant project had even commenced. It was asserted that such a reading was "patently uncommercial". Accordingly, it said that such a notification, "at the earliest, must occur once Icon knows with a degree of certainty all of the projects which are incomplete during the relevant policy period and for which it decides it wishes to seek run off cover", which was said to be shortly before the expiration of the annual period of insurance. 52 At J[69], the primary judge rejected the argument, saying: 69. I do not find these submissions persuasive. I am bound to give the Liberty Policy a businesslike construction on the assumption that the parties intended to produce a commercial result: Woodside (at 657 [35] per French CJ, Hayne, Crennan and Kiefel JJ); Mount Bruce (at 116-7 [47]-[49] per French CJ, Nettle and Gordon JJ). Although at first glance it might appear odd that Icon could acquire run off cover before the relevant annual policy took effect, or before a relevant project had even commenced, it does not necessarily follow that, should the parties have adopted the commercial expedient of ensuring that projects "declared" to Liberty during the period of insurance were so declared for the purposes of obtaining run off cover, such declarations would have been ineffectual to obtain that cover. Such declarations would still have been written instructions, would have been provided prior to the expiry of the Liberty Policy, and would have been, after accumulation, a "list" of such contracts. 53 We would agree with that analysis. A business-like interpretation that gives commercial working flexibility to a clause that is not on its face textually rigid would facilitate such project insurance - whether as run off properly so-called or by the ability to give whole of project cover to all contracts begun within a policy period and which are expected to be incomplete at the end of the policy period. The way Icon expressed the two elements of the clause reflects that commercial working flexibility. 54 At J[70], the primary judge continued: The nature and effect of the parties' adoption of such declarations, however, and the endorsements provided to effect such declarations, was the heart of the issue. This principal matter is one of context and surrounding circumstances, but staying with the text for present purposes, clarity as to what Condition 15 requires is found in the other important requirement of the clause, being the calculation of "additional premium". 55 His Honour then turned to the question of premium and said the following at J[71]-[74]. 71. That term, of course, cannot be construed in isolation. The whole of the policy has to be considered: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 (at 109 per Gibbs J). The "additional premium" referred to in Condition 15 was to be calculated "on expiring rates applied to value of works declared for completion of projects after expiry of the Period of Insurance". That method of calculation for the additional premium is at odds with the way in which the Liberty Policy, on its face, determined that the premium for the policy itself was to be calculated. 72. It is first to be noticed that there was, in fact, no stipulated premium set out in the Liberty Policy. In the Schedule under the heading "Premium" were simply the words "As Agreed". The next mention of premium is that contained in Condition 8, titled "Adjustment of Premium". I have set out Condition 8 at [28] above. The premium is said to be "provisional (unless otherwise agreed) and is based on the estimated Turnover for the Period of Insurance" (emphasis added). Icon was obliged under this condition to declare its turnover as soon as practical after the expiry date for the preceding period of insurance. "Turnover" is defined as follows: [T]he total value of work completed during the preceding twelve months period for the Insured's Business to which this Policy applies, including the value of principals supplied materials where appropriate [sic]. 73. After such a declaration of turnover, an "adjustment premium" was to be calculated as the difference between the provisional premium and the sum of the "agreed rate". It is clear, therefore, that what that condition contemplated was that the final premium to be paid under the Liberty Policy was incapable of ascertainment until after the period of insurance. However, as was agreed between the parties, Icon "declared" each of their contracts at or about the time of their commencement, and the premium paid by it was calculated by reference first to a deposit premium which was then offset or deducted against the premium payable when projects were declared. This agreed position supports the conclusion that the parties did in fact "otherwise agree" to determine the premium payable otherwise than pursuant to Condition 8. Indeed, Icon expressly admitted in its reply that the parties agreed that the premium payable for the Liberty Policy would not be calculated in accordance with that condition. 74. In such circumstances, there exists an ambiguity which necessitates an examination of some of the extrinsic materials. The parties' express agreement that Condition 8 was not to apply, and their dispute as to how, instead, the premium for the policy was to be calculated creates a difficulty in ascertaining, with precision, what "expiring rates" any such "additional premium" was to be additional to for the purposes of Condition 15. 56 With respect, there is a complexity in this analysis which masks a certain simplicity of operation of conditions 8 and 15 construed flexibly, as the primary judge (correctly) at J[69] construed the clauses. The premium for the policy was always "as agreed". Additional premium for condition 15 is that which is referable to the future value of the work if a premium based on turnover for the policy year has already been paid under condition 8; or, if condition 15 is going to be the vehicle through which all projects are notified and covered, the additional premium will be referable to the values of all projects declared by instructions in addition to any deposit or provisional premium taken under condition 8 or otherwise. How those premiums are calculated will depend upon whether condition 15 is being used for some only or all projects or contracts commencing in any year and what other risks during the annual policy period need be the subject of agreed premium. There is nothing intractable about the use of condition 15 caused by the terms of condition 8. 57 Once one accepts the commercially flexible construction which appears available, it is then a process of understanding what the parties did to understand whether condition 15 was engaged. 58 The primary judge dealt with three aspects of extrinsic circumstance: the evidence of the market, the parties' use of endorsements, and the calculation of premiums. We will examine his Honour's treatment of them in turn. But there is a certain complexity overall in a lack of distinction between, first, the meaning and width and commercially flexible operation of condition 15 and, secondly, whether it was engaged. 59 The primary judge examined the market at J[77]-[80]. The primary judge accepted (at J[77]) that a reasonable person in the position of the parties would have been aware of the features of the types of policies discussed by Mr Bovington. The primary judge summarised the argument of Icon at J[78] and J[79] as follows: 78. Icon sought to rely upon this evidence in support of its contention that the parties objectively intended that the Liberty Policy was to operate as a contracts commencing policy, that such a policy was intended to cover the defects liability period, and that the machinery for enabling that cover to occur was Condition 15. Support for this contention was sought from prior policies of insurance between the parties and renewal quotations which were in evidence, and the evidence of Mr Hingston and Mr O'Reilly, which showed that Liberty agreed that it would automatically cover projects commenced by Icon with a "maximum construction period" of up to 36 months for any one project, and that such agreement was consistent with the Liberty Policy being a contracts commencing policy. I will deal with the evidence as to attribution of knowledge and intention in detail when considering the Rectification Claim. 79. The essence of Icon's argument on the assistance to be gleaned from these materials is that, since the Liberty Policy and the parties' conduct bear the hallmarks of a contracts commencing policy, commercially sensible parties in the position of Icon and Liberty would have expected that the Liberty Policy covered Icon during the defects liability period. Further, it was said that a commercially sensible party in Icon's position is most unlikely to have bought cover that placed it in breach of all of its building contracts. Equally, a commercially sensible party in Liberty's position is most unlikely to have sought to offer a product for sale that did not meet the uniform contractual requirements of its insured customers. 60 The argument can be simply restated: Business people familiar with the market would understand how conditions 8 and 15 were able to work together. Condition 8 provided for a "traditional" annual turnover policy with premium calculated on the basis of the value of that year's work (originally provisionally estimated and later adjusted after year's end). Condition 15 provided for run off cover for all uncompleted contracts at year end if that were desired, or for contracts commencing cover as run off cover for such contracts (some or all) for which the insured gave instructions during the policy year. That is, that condition 15 was to be objectively understood as the contractual machinery for enabling a form of contracts commencing cover to be issued under the policy as an alternative or in addition to annual turnover cover for which condition 8 provided for premium adjustment. 61 The primary judge rejected this construction at J[80]-[90], notwithstanding his Honour's rejection (at J[69]) of some of Liberty's arguments described at J[68] (see [51] above). 62 First, at J[80], the primary judge said: But the construction task requires me to ascertain the parties' objective intention, and having regard to the language of that provision and the Liberty Policy as a whole, I am not persuaded that the evidence pointing to similarities between various policies, and the way the parties conducted themselves, is sufficient to enable me to draw the conclusion that Condition 15 ought be construed in the manner contended for by Icon. Further, a significant barrier to accepting Icon's contended construction is another known surrounding circumstance: the parties' adoption of adding "endorsements" to the policies. 63 At J[81]-[84] the primary judge dealt with the endorsements. His Honour rejected Icon's submission that they were not contractual. The primary judge concluded that they were contractual in character and provided for a form of cover for the whole project, that the "estimated project period" in the endorsement and its use of a date and time ("4.00 pm local standard time") revealed an intention to vary the period of insurance under the policy year for their contract to be "estimated", though precise, date of practical completion. The primary judge said the following at J[84]: Although it may be accepted that it was known to the parties that construction contracts generally required insurance to be in place to cover the defects liability period, that circumstance cannot displace the language of the endorsement in the light of the language of the Liberty Policy as a whole. Contrary to Icon's assertion that "estimated project period" must be read only as an "estimate", it would be commercially inconvenient to construe that phrase, with the precision with which the period is drafted ("4:00 pm local standard time"), as not marking an end point to the amended cover provided by that time period. Further, as an amendment to the Liberty Policy, the endorsement must be read with that policy. Critical to the operation of the Liberty Policy was the definition of "Insured", which included a number of companies within the Icon Group. The endorsement adds an additional insured, being Australia Avenue Developments Pty Ltd (AAD), the other party to the Opal Tower Contract. As an additional insured, the endorsement provides cover for Icon and AAD with the "amendments detailed herein". As Liberty correctly submitted, such additional insureds were not intended to be "added" to the Liberty Policy "at large". It follows that the identification of a period of insurance for additional insureds is important in ensuring clear limits as to the extent of coverage offered to any additional insureds. 64 The primary judge therefore concluded that the policy effected by the relevant documentation, including the endorsements, was not an engagement of condition 15, contract by contract, but the variation or amendment of the policy by the issue of endorsements to provide cover for declared contracts, but only up to the date of practical completion. 65 With respect, it is not clear (at least up to J[84] and bearing in mind the discussion from J[65] onwards) whether this conclusion is based upon a view that condition 15 as a matter of construction and meaning was not apt for use for individual contracts (a view which J[68] and J[69] would tend against) or upon a view that condition 15 was not engaged by the parties. 66 The primary judge then considered the question of the calculation of premium at J[85]-[87]. At J[85], his Honour said: In the light of the parties' adoption of declarations under and endorsements to the Liberty Policy, further weighing against Icon's construction that Condition 15 was engaged is the agreed fact that the premium was based on a deposit premium charged for the renewal, which was then offset against the premium payable for contracts declared during the policy period…. 67 With respect, this introduction to the discussion about premium highlights the lack of clarity to which we just referred: Is it a question of meaning of condition 15: that it cannot be seen to provide for ad hoc life of contract cover? Or is it a question whether, by what they did, the parties did not engage condition 15? 68 After introducing the issue as set out above in J[85], the primary judge continued in that paragraph by setting out Icon's argument: … Icon submitted that its construction of Condition 15 worked harmoniously with Condition 8. It said that the "additional premium" contemplated by Condition 15 is the premium representing the difference between the "turnover" for that project during the annual policy period which would otherwise be payable under Condition 8, and the full contract value which would be earned over the entire life of the contract. Thus, Icon submitted that Condition 15 permitted it to say "I now seek cover for the full contract duration, and I will pay you a premium on the additional revenue that I will earn from this contract for the full contract duration", and that this is in fact what happened. 69 The primary judge rejected the submissions at J[86] and J[87], as follows: 86. I cannot accept this submission. First, to the extent that the submission relies upon Condition 8 so as to show that, contextually, Condition 15 was objectively intended to operate in a manner consistent with the concept of turnover, it is a submission which ignores the express words of the definition of that term. That definition, in operation with Condition 8, identifies that the "agreed rate" is to be applied against the total value of work completed for the insured's business. To the extent I follow the submission, Icon's contention would have that defined term narrowed to a point inconsistent with its application in Condition 8. Secondly, the submission appears to be a departure from Icon's pleaded case, and from the agreed position it adopted in the Agreed Facts. Icon admitted in its reply that the premium was calculable otherwise than in accordance with Condition 8, and it otherwise pleaded that the agreed calculation of the premium was payable for each new project commenced during the annual policy period, calculated on the value of the total contract works for that project. Nothing in that pleaded operation of how the policy machinery determined the premium to be paid relies on the concept of turnover. 87. As Liberty correctly noted, Condition 15's "additional premium" cannot sensibly mean payment of the premium for the Liberty Policy itself. The ineluctable inference is that payment of the balance of the premium calculated under the endorsement was simply that: payment of the premium for the Liberty Policy. It cannot, therefore, have been "additional premium" for the purposes of Condition 15, that is, "additional" to what was paid for the cover provided under the annual policy. That would give no work to the word "additional". On Icon's characterisation of the premium paid for projects declared as "additional premium" for the purpose of run off cover, the entire premium pool collected during the course of each annual policy was "additional premium" paid for run off cover - and, necessarily, only for run off cover. It is unlikely that this was the objective intention of the parties, who were in agreement that the "deposit premium" was to be offset against the future premium paid after the declaration of each project. 70 With respect those considerations are somewhat opaque. "Turnover" was defined in the policy as follows: Turnover is defined as the total value of work completed during the preceding twelve months period for the Insured's Business to which this Policy applies, including the value of principals supplied materials where appropriate. 71 In circumstances where a policy year has been paid for under condition 8 by reference to estimated turnover for that year and then adjusted after the end of the policy year that is a premium by reference to the total value of work for that year. Upon instructions being given for all uncompleted contracts the total remaining value of work (the future turnover, if one likes) will form the basis of the premium calculation. So much is straightforward, as is the synonymous relationship between turnover and value of work. That, however, does not foreclose a business-like interpretation of conditions 8 and 15 to otherwise agree a premium structure by way of deposit premium for an annual policy to operate by declaration of contracts within the policy year to be covered as provided for by condition 15 for additional premiums referable to the total value of work for the life of the individual declared contracts. It can be accepted that this would alter the structure of the premium calculation and of the coverage structure of the policy. No one submitted that that could not be done. Premium was always "as agreed". The question is whether the terms of conditions 8 and 15, and especially condition 15 permitted such an approach by engagement of the existing policy terms, or whether existing terms had to be amended to provide for such a structure. We see no reason why they would not do so. 72 The primary judge concluded as follows at J[90]: It follows that on its proper construction, the Opal Declaration did not meet the requirements of Condition 15. 73 The "Opal Declaration" was the 2 November 2015 email which provided details of the Opal Tower Contract. It is not a question of the proper construction of the Opal Declaration; rather the question is whether condition 15 on its proper construction was wide enough to permit its use for the declaration of cover for individual contracts within a given policy year as a form of run off cover. If it was wide enough, was that effected by what the parties did?

[7]

The Opal Tower Contract 74 At this point it is helpful to trace in a little more detail the events leading up to the taking out of the 2015/2016 policy and the insuring of the Opal Tower Contract. The initial dealings between Icon and Liberty commenced in September 2012 in the conversations between Mr O'Reilly (of Austbrokers) and Mr Burgess (of Chase). By this time, Liberty and Chase had agreed upon a wording originally put forward by Chase, accepted by Liberty, being the Third Party Liability Policy. On 4 September 2012, Mr O'Reilly sent Mr Burgess a quotation slip and company profile of Icon. The quotation slip was for "Annual Contract Works". It was for "Material Loss and Damage" referable to the "Construction Period" and "Maintenance/Defects Liability Period". Adjacent to the heading "Insured Operations" there appeared the following: All Contracts or Works relating to residential and commercial building construction including all associated works undertaken by the Insured and not otherwise insured by the Principal/Owner or other parties in terms of the contract agreement, commenced and declared within the Period of Insurance. Under "Insured Property" there was a heading "Liability" which stated the following: The Insurer(s) shall indemnify the Insured against the legal liability of the Insured to pay damages or compensation in respect of: (a) injury to any person; (b) damage to property; caused by an Occurrence during the Construction Period and/or the Maintenance/Defects Liability Period happening anywhere in the world in connection with the Contract(s) or Works. 75 Mr Burgess provided the quotation slip to Liberty's underwriter, Mr Hingston. He initialled it on 6 September 2012 and communicated his assent to Mr Burgess. 76 On 7 September 2012, Mr Burgess sent an email to Mr O'Reilly regarding Icon, which stated: Reference is made to the above and recent communications. In reviewing this opportunity we have suggested some structural improvements which we hope will prove to be beneficial from an administrative and cost perspective for both yourselves and ICON. Please review attached Quotation and I will give you a call shortly to discuss. 77 The enclosed quotation was on Chase letterhead. It concerned contract works and third party liability cover. The quotation stated: POLICY TYPE: Contract Works and Third Party Liability Annual INSURED: ICON Construction Australia Pty Ltd; and others as per policy PERIOD OF INSURANCE 20 September 2012 to 20 September 2013 CONTRACT LIMITATIONS Maximum Construction Period 36 months Maximum Maintenance Period 12 months Maximum Testing Period 1 month .... Material Damage Insurers will indemnify the Insured for risks of physical loss of and/or damage to Property Insured forming the Contract Works and Existing Structures (if detailed as covered herein), owned by the Insured or for which the Insured may be responsible. Third Party Liability Insurers will indemnify the Insured for all sums which the Insured shall become legally obligated to pay as compensation in respect of Bodily Injury and/or Property Damage happening during the Period of Insurance and arising out of or in connection with the Business and Activities of the Insured as detailed. …. Third Party Liability $20,000,000 any one Occurrence, unlimited in the aggregate during the Period of Insurance, but limited to $20,000,000 in the aggregate during the Period of Insurance arising from Completed Operations/Products Liability. 78 The quotation identified ACE Insurance Limited as the contract works/material damage insurer and Liberty as the Third Party Liability insurer. One can see that the third party liability coverage was not expressed as during the "Construction period and/or the Maintenance/Defects Liability Period", as it was in the Austbrokers' quotation slip (which Mr Hingston had initialled) to which the Chase quotation was a response. 79 Later on 7 September, Mr O'Reilly provided a renewal report to his client, Icon (to Mr Sisson) which stated adjacent to "Scope of Cover" under the heading 'Third Party Liability' a summary of proposed cover for third party liability identical to that in the Chase quotation above, and adjacent to "Insured Property" under the heading "Liability" a summary of the cover as in Austbrokers' quotation: that is during the Construction Period and/or Maintenance/Defects Liability Period. Further, adjacent to "Insured Operations" there appeared: All Contracts or Works relating to residential and commercial building construction including all associated works undertaken by the Insured and not otherwise insured by the Principal/Owner or other parties in terms of the contract agreement, commenced and declared within the Period of Insurance. 80 On 11 September 2012, Mr Burgess sent Mr O'Reilly the draft policy wording for both the Material Damage Contract Works policy and the Third Party Liability Policy. The former policy (that of ACE) identified the period of insurance as from 20 September 2012 at 4.00pm to 20 September 2013 at 4.00pm local standard time and that the Material Damage sections applied to: All contracts and/or work of every description commenced by the Insured during the Period of Insurance 81 The premium was "as agreed". Further, that Material Damage Contract Works policy had an extension period of risk as follows: Period of Risk The Property Insured shall be deemed to be insured during the Period of Insurance as set out in the Schedule and until the said Property Insured has been formally accepted by the owner as completed whichever is easier, plus the Maintenance and Defects Liability Period as set out in the Schedule. Any work of reconstruction rectification or repair undertaken by the Insured during any Maintenance or Defects Liability Period in accordance with the provisions of any contract shall be covered hereunder subject to the terms and Conditions of this Policy. 82 It also had a "Run Off Cover" extension (cl 17) as follows: Run Off Cover Subject to written instructions from the Insured to the Insurer(s), prior to expiry of the Period of Insurance, this Policy will continue in full force and effect at terms and conditions prevailing immediately prior to expiry for all incomplete contracts as at date of expiry until completion of those contracts including any testing and/or defects liability and/or maintenance periods. The Insured is required to provide the Insurer(s) with a list of contracts requiring Run Off and additional premium is to be calculated on expiring rates applied to value of works declared for completion of projects after expiry of the Period of Insurance. 83 In the Third Party Liability Policy, the period of insurance was 20 September 2012 at 4.00pm to 20 September 2013 at 4.00pm local Standard Time. The insuring clause was in relevantly the same terms as set out at [21] above. The premium was "As Agreed". Condition 8 (Adjustment of Premium) was in relevantly the same terms as condition 8, at [20] above; and condition 16 ("Run Off") was in the same terms as condition 15 at [20] above. 84 Mr O'Reilly gave evidence that about this time he had conversations with Mr Burgess. The primary judge set out these crucial conversations from his affidavit at J[163] and J[164] of the reasons as follows: [163] … 39 At around this time in September 2012, Adam and I had a number of conversations in which I said words to the effect that I wanted to obtain a "contracts commencing" insurance program for the Icon Group for both contracts works and liability insurance in which each project was separately declared and the premium paid for each project at declaration. Adam said words to the effect that Chase could do that. … 40 On 11 September 2012, I requested the policy wordings from Chase. I received these from Adam Burgess on the same day. … [164] … 43 I read the wordings and telephoned Adam Burgess. I said words to the effect that I did not understand the reference in Condition 8 of the proposed wordings to the premium being calculated on the basis of the Icon Group's annual turnover. Adam Burgess said words to the effect that I did not need to worry about Condition 8 as the policy is a run-off policy and told me to look at Condition 16. I then read Condition 16 while I was on the phone with Adam Burgess. Once I had finished reading it I said words to the effect of "OK, so we are agreed that it is contracts commencing". He said yes. 44 Around this time in September 2012, Adam Burgess and I discussed two projects that the Icon Group had been awarded that were due to commence at or after the expiry of the Pre-2012 QBE Policy, which we envisaged would be covered by Chase's insurance program. Those projects were known as "Green Square" and "Tip Top". Adam calculated a premium for those projects, which formed the basis of the premium that was to be payable under the Chase policy for that first year. … In those discussions in or around September 2012, both Adam and I said words to the effect that an additional premium would be payable for each new project commenced during the annual policy period, calculated on the total project value and paid at the time of commencement of each project. Adam said that, with respect to projects up to a value of $50 million, the pricing was as per the annual policy unless there were unusual site conditions. Above that figure, he said that the pricing could vary. … 47 On 19 September 2012, I emailed Adam Burgess … stating: "Following on from our many conversations, and my email on Friday confirming the binding of the Tip Top project from Tuesday the 18th, I wish to formally confirm that the terms have been accepted by the client, and our closings shall follow shortly. Tip Top bound from Tuesday 18th of September. Annual was to commence from the 20th of September (expiry of current program), but if it makes your life easier I am happy to close from the 18th to link in the Tip Top project. I confirm that the existing program that we are replacing with Chase Underwriting is 'Contracts Commencing', so all existing projects will be run off under the existing cover and we are a 'Clean On' process for the placement of the program with your office." 85 After a careful discussion of the cross-examination of Mr O'Reilly, the primary judge accepted Mr O'Reilly's evidence: see J[220] of the reasons. This assessment of Mr O'Reilly's evidence fell within the section of the primary judge's consideration of the rectification case, to which we will come. 86 On 17 September 2012, Mr O'Reilly sent Mr Ellisdon (of Icon) an Austbrokers "certificate of insurance" addressed to Mr Sisson (of Icon) stating in respect of both material damage cover with ACE and liability cover with Liberty the following: Period of Insurance From 20th of September 2012 To 20th of September 2013 Particulars of Operations All contracts commenced by the insured after the commencement of the period of insurance 87 On 6 October 2012, Mr O'Reilly sent Ms Sisson various insurance invoices for his consideration, including for "Construction & Liability Insurance" under two documents: one for a "Material Damage Premium" and one for "Contractors Liability Premium". The two invoices had largely identical content in describing the insured, the business and the insured operations. In respect of the "Insured Operations" the following appeared in both invoices: All Contracts or Works relating to residential and commercial building construction including all associated works undertaken by the Insured and not otherwise insured by the Principal/Owner or other parties in terms of the contract agreement, commenced and declared within the Period of Insurance. 88 The effectuation of the mutually intended (at least as between Mr O'Reilly and Mr Burgess) placing of contracts commencing cover through the contractual medium of the then numbered condition 16 was reflected in the treatment contemporaneously of two specific risks. The first was the "Tip Top" project. It had been discussed between Mr O'Reilly and Mr Burgess during September 2012: see para 44 of Mr O'Reilly's evidence set out above. On Wednesday, 19 September 2012, Mr O'Reilly sent Mr Burgess the email set out above in para 47 of Mr Reilly's evidence ([84] above). 89 The second project was "Green Square". Mr O'Reilly's evidence was that Mr Burgess calculated the premium for these two projects which formed the basis of the premium that was to be payable for the policy for the first year. 90 On 21 September 2012, Mr Burgess sent a placing slip for Third Party Liability cover to Mr Hingston requesting that Liberty bind cover, the slip contained no reference to maintenance/defects liability period and contained the following: PERIOD OF INSURANCE: 18 September 2012 at 4.00pm to 18 September 2013 at 4.00pm INTEREST INSURED: Insurer(s) agree to indemnify the Insured in respect of all amounts which the Insured shall become legally liable to pay in respect of: (a) Personal Injury; (b) Property Damage; (c) Advertising Injury; (d) Interference with Traffic happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Business. 91 Mr Hingston signed and returned the slip on that day. The slip sent to and signed by Mr Hingston had a premium calculated by reference to "Turnover/Declared Values" of $200,000,000. On 21 December 2012, Mr Burgess sent a revised placing slip to Mr Hingston to reflect the accurate basis of calculation of premium (as agreed between Mr O'Reilly and Mr Burgess): $234,800,000 being the total of the value of work for the Tip Top and Green Square projects. 92 On 21 December 2012, Mr Burgess emailed Mr O'Reilly in connection with the Green Square project: "We confirm having effected Project placement for the period 21 December 2012 to 21 December 2014". 93 For renewal the following year, on 17 September 2013, Mr Burgess sent Mr O'Reilly a renewal quotation for the Contract Works and Third Party Liability policies, which included the following: POLICY TYPE: Contract Works and Third Party Liability Annual INSURED: ICON Construction Australia Pty Ltd; and others as per policy PERIOD OF INSURANCE: 18 September 2013 to 18 September 2014 CONTRACT LIMITATIONS: Maximum Construction Period 36 months Maximum Maintenance Period 12 months … Material Damage Insurers will indemnify the Insured for risks of physical loss of and/or damage to Property Insured forming the Contract Works and Existing Structures (if detailed as covered herein), owned by the Insured or for which the Insured may be responsible. Third Party Liability Insurers will indemnify the Insured for all sums which the Insured shall become legally obligated to pay as compensation in respect of Bodily Injury and/or Property Damage happening during the Period of Insurance and arising out of or in connection with the Business and Activities of the Insured as detailed. 94 A similarly worded quotation was sent by Chase to Mr O'Reilly on 3 September 2014. 95 The premium for Third Party Liability was calculated on $50m at the same rate as the prior year (.0595%). This rate never changed in the period 2012 to 2017. Mr O'Reilly described this as a deposit premium and set off against premium due on the declared contracts. The agreed facts ([23] and [24]) were as follows: 23. From at least the policy period which commenced on 20 September 2013, and in respect of each subsequent Annual Liberty TPL Policy, Icon paid a deposit premium which was then offset or deducted against the premium payable when projects were declared under that Annual Liberty TPL Policy. 24. A premium was calculated and charged by reference to the full contract value of each project declared to Liberty. Icon contends that this was the case from the outset of the Liberty Annual TPL Policy (from 20 September 2012), but Liberty disputes this. 96 Up to 2015, various projects had been declared under the policy. The agreed facts were that between September 2012 and September 2017 48 Icon projects were notified; that of these 48 projects, 22 notifications did not provide information on the defects liability period, inferentially 26 did; and that Chase provided Icon with an endorsement in relation to 18. 97 It is unnecessary to deal individually with the many notifications of projects. Each gave information such as the project name, the client, the address, the scope of works, the value of works, the duration of works and interested parties. A typical response by Chase thanked Austbrokers for their "instructions" or "instructions and information" and confirmed cover bound and (sometimes) attached a relevant endorsement. 98 On 7 September 2015, Mr O'Reilly sent a renewal quotation to Mr Burgess. It was in similar form to that sent in 2012 (see [74] above) containing the following under the heading "Liability": The Insurer(s) shall indemnify the Insured against the legal liability of the Insured to pay damages or compensation in respect of: (a) injury to any person; (b) damage to property; caused by an Occurrence during the Construction Period and/or the Maintenance/Defects Liability Period happening anywhere in the world in connection with the Contract(s) or Works. 99 This was sent to Mr Hingston who read it on 16 September 2015. On the following day he emailed Chase stating: "I confirm agreement to continuation of expiring terms for the 2015/2016 period". On that same day Chase sent a "renewal offer" to Mr O'Reilly for Contract Works and Third Party Liability, which contained the following: POLICY TYPE Contract Works and Third Party Liability Annual ... PERIOD OF INSURANCE: From: 20th September 2015 at 4:00pm local standard time To: 20th September 2016 at 4:00pm local standard time … INSURED CONTRACTS: All contracts commenced by the Insured after 4:00pm on 20th September 2015 and on hand at the commencement of the Period of Insurance. CONTRACT LIMITATIONS: Maximum Contract Value $50,000,000 Maximum Construction Period 36 months Maximum Maintenance Period 12 months Maximum Testing Period 4 weeks … COVERAGE OUTLINE: Material Damage Insurers will indemnify the Insured for risks of physical loss of and/or damage to Property Insured forming the Contract Works and Existing Structures (if detailed as covered herein), owned by the Insured or for which the Insured may be responsible. Third Party Liability Insurers will indemnify the Insured for all sums which the Insured shall become legally obligated to pay as compensation in respect of Bodily Injury and/or Property Damage happening during the Period of Insurance and arising out of or in connection with the Business and Activities of the Insured as detailed. 100 The premium was calculated on $50 million "Turnover/Declared Values". Below the table of premiums appeared the following: PREMIUM RETURN: Unless detailed otherwise above, the maximum allowable return premium will be 25% of the provisional premium paid. 101 The wording adjacent to "Insured Contracts" had not appeared in Chase renewal quotations until the 2014/2015 period. 102 On 18 September 2015, Mr O'Reilly sent Mr Burgess and Mr Bortone a placing slip to confirm renewal of the program. It described the Liability cover as it had been set out in the Chase renewal quotation. The wording adjacent to "Insured Contracts" in the Chase renewal quotation did not appear. 103 On 2 November 2015, Mr O'Reilly notified Chase of the Opal Tower Contract (referred to as the Opal Tower Declaration). The information included anticipated completion of 10 August 2018 and a defects liability period of 12 months. On that same day, Austbrokers sent Icon certificates of insurance in respect of the Opal Tower Contract. This insurance certificate for Construct Works and liability insurance contained the following: Type of Insurance Contract Works and Public & Products Liability Insured ICON Co (NSW) Pty Ltd, and/or principals and/or financiers, all for their respective rights, interests and liabilities. Insurer Material Damage ACE Insurance 65% Mitsui Sumitomo Insurance 35% Liability Liberty International Underwriters 100% Policy Number 438396 Period of Insurance From 16th of November 2015 To Practical Completion estimated at 10th of August 2018 plus 12 months maintenance period Particulars of Operations All contracts on hand and commenced by the insured after the commencement of the period of insurance including the Opal Tower project

[8]

104 On 9 December 2015, Mr Bortone (a colleague of Mr Burgess) sent an email to Mr O'Reilly which stated (inter alia): As discussed cover is in place from 16th November 2015 and ending 10th August 2018 with the following terms to apply as we have communicated before verbally. … Can you please confirm all is in order and I will send over the Endorsements for your records. 105 Mr O'Reilly's evidence was that he was not concerned about the lack of a reference to the defects liability period in Mr Bortone's email because he considered he was getting cover under condition 15. This evidence was accepted by the primary judge. It is to be noted that only five weeks before Mr O'Reilly received Mr Bortone's email, he described the cover to his client in the certificate of insurance as including the defects liability period ("the maintenance period"): [103] above. 106 The endorsement for the Opal Tower project was signed by Mr Hingston on 22 December 2015 (the Opal Endorsement). It added an insured: the principal, Australian Avenue Developments Pty Ltd and an interested party: Sydney Olympic Park Authority. In common with other endorsements issued for specified contracts it was headed: IT IS HEREBY NOTED AND AGREED THAT THE ANNUAL THIRD PARTY LIABILITY FLOATER POLICY IS AMENDED TO INCLUDE THE FOLLOWING CONTRACT, WITH AMENDMENTS AS DETAILED HEREIN. 107 It then set out "The Insured", "Additional Insured", "Interested Party", "Project Location", "Project Description", "Estimated Project Period" (which was two dates: 16 November 2015 to 10 August 2018 at 4:00pm standard time), "Interest Insured", "Geographical Limits", "Limits of Liability" and "Excess". 108 The "Interest Insured" was described as: Insurer(s) agree to indemnify the Insured in respect of all amounts which the Insured shall become legally liable to pay in respect of: (a) Personal Injury; (b) Property Damage; (c) Advertising Injury; (d) Interference with Traffic happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Business. 109 The premium was on the Full Value of Works ($154,707,111) at .0595%.

[9]

The cross-appeal 110 The notice of cross-appeal was long and to a degree complex. The submissions, however, simplified the matter.

[10]

Grounds 1-4 and 9-11: The Opal Declaration met the requirements of condition 15 111 Grounds 1-4 and 9-11 were argued together. They were in the following terms: 1. The learned trial judge erred in finding that the Opal Declaration did not meet the requirements of Condition 15 ([90]). 2. The learned trial judge should have found that Condition 15 had only two requirements, being: (a) first, "written instructions from the Insured to the Insurer(s) prior to expiry of the Period of Insurance" identifying "contracts requiring Run Off" (First Condition 15 Requirement); and (b) second, payment of a premium "calculated on expiring rates applied to the value of works declared for completion of projects after expiry of the Period of Insurance" (Second Condition 15 Requirement), and that Icon satisfied the: (ac) First Condition 15 Requirement, by the Opal Declaration that Austbrokers (acting on behalf of Icon) gave to Chase (acting as agent of Liberty) on 2 November 2015; and (bd) Second Condition 15 Requirement, by paying a premium for the Opal Tower Project calculated by applying the rate set out in the Liberty Policy to the cost value of the Opal Tower Contract. 3, The learned trial judge erred in finding that Condition 15 was ambiguous ([61], [72], [74]). 4. The learned trial judge should have found the terms of Condition 15 are clear and unambiguous and that the proper interpretation of Condition 15 can be determined: (a) solely by reference to the Liberty Policy wording; (b) alternatively, solely by reference to the Liberty Policy wording and the premium calculation rates and adjustment rates set out in the renewal quotation provided by Chase on 17 September 2015 and the placing slip provided by Austbrokers on 18 September 2015. …. 9. The learned trial judge erred in finding that the premium Icon paid for the Opal Tower was not "additional premium" for the purpose of Condition 15 ([87]). 10. The learned trial judge should have found that Icon paid all the premium required to obtain run off cover for the Opal Tower under Condition 15. 11. Further, the learned trial judge erred by: (a) finding that the agreed fact that a deposit premium was paid upon renewal of the Liberty Policy, which was then offset against the premium payable for contracts declared during the policy period, weighed against the conclusion that Icon had obtained run off cover for the Opal Tower under Condition 15 ([85]); and (b) finding that the terms of Condition 15 cannot objectively operate in a manner consistent with Condition 8 of the Liberty Policy and/or that such a submission was inconsistent with Icon's pleaded case ([86]).

[11]

Icon's submissions on grounds 1-4 and 9-11 112 Icon submitted that condition 15 was textually clear and imposed two requirements: (1) to provide written instructions prior to the expiry of the Period of Insurance of a project that will be incomplete at expiry; and (2) to pay the necessary premium calculated by applying "expiring rates" to the value of works declared for completion after expiry of the Period of Insurance. 113 That meaning, it was submitted, was fortified by its contextual relationship with condition 8 and its ability to work harmoniously with it. Together the two provisions contemplate a premium based on turnover for the 12 month period and an additional premium also based on turnover or revenue for the balance of the contract: in total its full contractual value. 114 The defects liability period is intended to be the subject of cover if instructions were given for contracts that were incomplete at the date of expiry. 115 Assistance contextually was also sought from exclusion 7 which included any maintenance or likely liability period in the phrase "period of construction". 116 It was submitted that this construction of condition 15 was faithful to the commercial purpose of the effecting of insurance for a commercial construction contractor whose business imposes risks and liabilities upon it throughout both the construction and defects liability period. Implicit in this submission was that this could be achieved by either using the wording to effect annual turnover cover indemnifying risk of liability from damage within the annual period of insurance arising from the business whether during the construction period of a contract or during any defects liability period, or if it were wished to lock in cover and its cost at the outset of a project utilise condition 15 to obtain cover for all contracts the subject of written instructions for the life of the contracts including the defects liability period. 117 Icon submitted that the primary judge's reasons involved six errors. First, the four elements of condition 15 were relevantly undistinguishable from the two requirements submitted by Icon, and should have been so recognised. 118 Secondly, in J[68]-[69] of the reasons after rejecting the submission of Liberty and finding the first paragraph of condition 15 "straightforward" his Honour erred in concluding that the "heart of the issue" was the nature and effect of the endorsements to effect the declarations. The endorsements, it was submitted, could not provide objective facts to construe condition 15. 119 Thirdly, Icon submitted that the primary judge wrongly considered extrinsic circumstances to find in J[74] that "[t]he parties' express agreement that Condition 8 was not to apply, and their dispute as to how, instead, the premium for the policy was to be calculated" could not be used to find ambiguity. The primary judge, it was submitted, concluded that the parties by agreeing not to calculate premium in accordance with condition 8 had effectively agreed to conduct themselves outside the contract. He was wrong, it was submitted, to do so because condition 15 could operate by additional premium under condition 15, whether additional to a deposit premium or additional to that already charged for previous contracts declared in the policy period. There was no ambiguity in condition 15: what "expiring rates" were, or the manner of calculation of the premiums. 120 Fourthly, Icon submitted that the primary judge failed to give a harmonious construction to conditions 8 and 15. The two clauses facilitated or permitted the policy to operate on an annual turnover basis or an annual contracts commencing basis, consistently with the mutually understood operation of the market. To the extent that the primary judge found that this went beyond the pleaded case his Honour erred, it was submitted: In its reply Icon pleaded condition 15 as the contractual machinery for the policy to operate as a contracts commencing policy. 121 In essence, Icon submitted that the primary judge was wrong to conclude that the policy could only work as an annual turnover policy with a facility (condition 15) to run off a program, where condition 15 was wide enough to allow the policy to operate as a contracts commencing policy such that either type of insurance would be able to be effected depending upon the choice of the parties. 122 Fifthly, such a construction did not advance the commercial purpose of the policy and was not commercially sensible. It is plain (and Mr Hingston accepted) that the premium calculable under condition 15 was or would be the same as calculated under the endorsement as it was construed by the primary judge, yet the former but not the latter gave cover for the defects liability period. 123 Sixthly, the primary judge was submitted to have erred in concluding that "additional" premium in condition 15 could not be "the entire premium pool collected during the course of each annual policy": J[87]. As a matter of construction the additional premium was said to be additional to that specified in condition 8; but that did not disentitle the parties agreeing on premium (it always being "As Agreed") as a deposit premium and then all additional premiums under condition 15.

[12]

Grounds 5-8: error in relying on the Opal Endorsement 124 Grounds 5-8 were in the following terms: 1. The learned trial judge erred in finding that the Opal Tower Endorsement was relevant and admissible for the purpose of construing the terms of Condition 15 of the Liberty Policy ([82]) in circumstances where: (a) the terms of Condition 15 are clear and unambiguous; and/or (a) the Opal Tower Endorsement was never provided to Icon or its agent, Austbrokers; and/or (b) the Opal Tower Endorsement was prepared by Chase after the terms of the Liberty Policy had been agreed. 2. The learned trial judge should have found that the Opal Tower Endorsement was irrelevant and inadmissible for the purpose of construing Condition 15 of the Liberty Policy ([82]). 3. Further, the learned trial judge erred by: (a) finding that it was "agreed" that, although the Opal Tower Endorsement was not provided to Icon, the substance of the terms of the Opal Tower Endorsement were provided in writing by Chase to Austbrokers ([82]); (c) using prior endorsements to conclude (in effect) that the terms of the Opal Endorsement were known to both parties ([82]); (d) using the language of the Opal Tower Endorsement and, in particular the "Estimated Project Period" referred to in the Opal Tower Endorsement, to construe the terms of the Liberty Policy ([84]); (e) construing the end of the "Estimated Project Period" as marking the end of the cover provided in relation to the Opal Tower under the Liberty Policy ([84]); (f) finding that the Opal Tower Endorsement had the effect of adding an additional insured to the Liberty Policy, being AAD which was the principal under the Opal Tower Contract ([84]), in circumstances where the terms of the Liberty Policy already defined the "Insured" to include not only Icon and a number of companies in the Icon Group, but also "joint venture companies and/or principals and/or financiers and/or contractors and subcontractors" which included AAD; (g) construing the Opal Tower Endorsement as an amendment to the Liberty Policy ([84]) in circumstances where: (i) the Opal Tower Endorsement was never provided to Icon or its agent, Austbrokers; and (ii) upon the learned trial judge's construction of the term "Estimated Project Period" as appearing in the Opal Tower Endorsement, the Opal Tower Endorsement provided to Icon was a lesser period of cover in relation to the Opal Tower than it was otherwise entitled to as of right under Condition 15 for the same premium; and (iii) by reason of the matters in paragraph 7(f)(ii) above, Icon received no consideration for the amendment that the learned trial judge found that the Opal Tower Endorsement made to the Liberty Policy. 4. Alternatively, if the Opal Tower Endorsement: (a) is relevant and admissible for the purpose of construing the terms of Condition 15 of the Liberty Policy; and (h) had the effect of amending the Liberty Policy, then the learned trial judge should have found that, properly construed, the terms of the Opal Tower Endorsement had the effect of amending the Liberty Policy to include the Opal Tower Contract for the full period of that contract (including any defects liability period) and not just to the end of the "Estimated Project Period" recorded in the Opal Tower Endorsement.

[13]

Icon's submissions on grounds 5-8 125 The conclusion of the primary judge that the Opal Endorsement varied the policy was wrong, it was submitted, for five reasons. 126 First, the endorsements were not habitually provided - only on 18 out of 48 contracts. They were not surrounding circumstances. The Opal Endorsement was not provided to Icon or its broker. It was an internal document, recording Liberty's view. 127 Secondly, the endorsement was prepared after Icon declared the Opal Tower Contract and was incapable of varying the contract effected by the declaration or instructions by Icon. 128 Thirdly, the endorsement was not a contractual document and in any event the words "estimated project period" would not reasonably be construed as varying the cover granted by condition 15. So to treat the reading of the phrase as such was also inconsistent with the finding of fact (at J[243]) that Mr Hingston did not understand it thus. There was no adding of insured parties and therefore no variation to the cover, it was submitted, as the principal under the Opal Tower Contract was covered already by reference to the definition of "Insureds" in the schedule. 129 Fourthly, the endorsement itself provided that "all other terms conditions and limitations apply as per policy" yet, the effect of the primary judge's reasons was that by giving written instructions to cover the contract and paying a premium calculated in the same manner as condition 15, cover was obtained of a lesser character than under condition 15. This was submitted to be an uncommercial confining of the operation of condition 15. 130 Fifthly, by reference to principles of offer and acceptance, the contract amendment, if it was an amendment, took place on 2 November 2015 upon the notification by giving instructions. Condition 15 was a standing offer.

[14]

Ground 12: failure to afford due weight to evidence of the insurance market 131 Ground 12 was in the following terms: Alternatively, insofar as it was necessary and permissible to have regard to evidence of events, circumstances or things external to the Liberty Policy in order to construe the terms of Conditions 15: (a) the learned trial judge erred by: (i) failing to give due weight to the evidence of Mr Bovington about the construction insurance market (which evidence the learned trial judge accepted at [45] - [46]) and/or Agreed Facts 62 - 66 as part of the mutually known background facts when interpreting Condition 15; (ii) finding that the evidence of Mr Bovington about the construction insurance market (which evidence the learned trial judge accepted at [45] - [46]) and/or Agreed Facts 62 - 66 did not assist in favouring Icon's construction of Condition 15 ([77] - [80]); and (iii) finding that "a significant barrier" to Icon's construction of Condition 15 was "the parties' adoption of adding 'endorsements to the policies" ([79] - [80]); (i) the learned trial judge should have found that the evidence of Mr Bovington about the construction insurance market (which evidence the learned trial judge accepted at [45] - [46]) and/or Agreed Facts 62 - 66 favoured Icon's construction of Condition 15 in that reasonable business persons in the positions of Icon and Liberty, having knowledge of the evidence of Mr Bovington about the construction insurance market and/or Agreed Facts 62 - 66, would have understood: (i) the terms of Condition 15 to mean that if Icon: (1) gave Liberty written notice prior to the expiry of the period of insurance for the Liberty Policy that it sought cover for a contract that would not be completed prior to expiry of the period of insurance for the Liberty Policy; and (2) paid a premium for that contract calculated by applying the rate set out in the Liberty Policy to the total value of works under that contract; the Liberty Policy would continue in full force and effect for that contract until completion of that contract including any testing and/or defects liability and/or maintenance periods; and (ii) that the matters set out in Grounds 2(c) and (d) above in relation to the Opal Tower Project would satisfy the requirements of Condition 15.

[15]

Icon's submissions on ground 12 132 Icon submitted that the primary judge gave insufficient weight to the unchallenged evidence of Mr Bovington. A reasonable business person would expect, it was submitted, cover bought by a premium based on the total value of the contract would have a duration that included the defects liability period. 133 Embedded within Icon's submissions, however, was a more powerful expression of the relevance of Mr Bovington's evidence: the market in which this contract was issued had the two well-known types of cover. As a matter of commercial convenience, unless the wording of the Liberty policy was intractable, a commercial and businesslike construction to conform with reasonable commercial behaviour and choice in such a market would be to construe the policy as to be able to provide, at the choice of the parties, either annual turnover cover with a run off capacity or contracts commencing cover by utilisation of the runoff provision. The primary judge erred in failing to give weight as a matter of commercial context to Mr Bovington's evidence.

[16]

Ground 13: condition 15 should be construed contra proferentum (sic) 134 Ground 13 was in the following terms: Alternatively, insofar as there was any ambiguity in the terms of Conditions 15: (a) the learned trial judge erred by finding that the contra proferentum rule did not favour Icon's construction of Condition 15 ([89]); and (j) the learned trial judge should have resolved any ambiguity against Liberty, which had control of the drafting of the terms of the Liberty Policy.

[17]

Icon's submissions on ground 13 135 Icon submitted that the primary judge, in circumstances of a degree of ambiguity in how condition 15 could be seen to operate, failed to give the requisite degree of liberality to the construction of the policy in favour of the insured as required by Johnson v American Home Assurance Company [1998] HCA 14; 192 CLR 266 at 274-275 and Australian Casualty Co Ltd v Federico [1986] HCA 32; 160 CLR 513 at 520-521.

[18]

Liberty's submissions on the cross-appeal: general introduction 136 Liberty emphasised that the policy was a standard annual turnover policy providing cover for liability from loss or damage during the period of insurance. This was broader in one sense than cover for specified projects undertaken at a particular time. Questions of when the contract was entered, what stage the project had reached, even whether the defects liability period had expired were irrelevant. The relevant question was: Did the damage (for which the insured was liable) happen within the period arising in connection with the business of the insured? Thus, its structure was not a "contracts commencing" policy. It was to use the argot: "dirty on, clean off". 137 Liberty submitted the primary judge was correct (at J[72] and J[73]) to view the 'notification' or 'duration' of projects arose in connection with the parties "otherwise agreeing" on the method of calculation of premiums within the terms of condition 8. The endorsements were a necessary part of this: they were the contractual means by which the parties "otherwise agreed". 138 This contractual variation was embodied in the communications being 2 November 2015 ([103] above), 9 December 2015 ([104] above) and the endorsement of 22 December 2015 ([106] above). 139 No issue of run off cover ever arose. Condition 15 was never enlivened.

[19]

Liberty's submissions: grounds 1-4 and 9-11: condition 15 140 Liberty's central submission as to condition 15 is that it addresses the situation at the expiration of existing cover when an insured no longer seeks an annual policy such as when it is changing insurers or ceasing operations. That is what we have referred to as run off properly so-called. 141 The effect of Icon's contention that run off cover was obtained from commencement of a project under condition 15 was that it obtained both cover under the annual policy and run off cover under condition 15. 142 Liberty, however, had to confront the primary judge's rejection in J[69] of its submissions set out at J[68] of the reasons. Liberty submitted that the views of the primary judge at J[69] were overly generous to Icon: but Liberty supported the primary judge's approach to "additional premium" as determinative of the construction question. Liberty submitted that, in substance, the primary judge correctly analysed what the parties did: they "otherwise agreed" as to how to calculate premium, as they were entitled to do, premium being "as agreed" and condition 8 leaving it likewise open. Thus the parties agreed the premium otherwise than under condition 8. This was and could not be seen to be an additional premium at expiry rates for condition 15. This was not so much an ambiguity necessitating an examination of extrinsic material as stated by the primary judge at J[74], but the need to determine the precise terms on which the parties otherwise agreed, as a question of fact. 143 Liberty submitted that the characterisation of the premium charged as "additional" meant that the entire premium was for runoff and the annual 12 month period of insurance was without premium. The evidence disclosed that the premium calculated and collected on the contract value of individual projects was the total premium, there being no separate part of premium by reference to estimated or actual turnover or any other basis. Condition 15 requires "additional" premium. Liberty supported the view of the primary judge at J[87] that as a matter of construction, the requirement of additional premium meant premium in addition to that which is contemplated for the purpose of acquiring the policy and the award period. It could not all be "additional premium" without being additional to anything. The deposit premium was allocated to the specific projects once they were on hand. Payment of the balance of the premium was just that: payment of the premium for the policy, not "additional premium" (for run off) to what had been paid for the cover provided under the annual policy.

[20]

Liberty's submissions: grounds 5-8: the Opal Endorsement 144 Liberty submitted that the primary judge was correct to reject Icon's submissions that the Opal Endorsement was Liberty's internal record of the project declared and not capable of varying the contract of insurance. 145 Liberty supported the two reasons given by the primary judge at J[82]-[84] for this view. First, although the endorsement was not provided to Icon or Austbrokers the substance of the terms were provided in writing by Chase to Austbrokers. Further, endorsements were regularly, though not invariably, provided to reflect coverage for declared projects, which was extended past the annual period up to the date of the estimated project period. 146 The second reason of the primary judge was the precision of the "estimate" as marking an end to cover. 147 Four additional matters were submitted by Liberty in support of this construction of the endorsement. First, the words were consistent with a precise period of insurance: "4:00pm local standard time" were redundant unless referable to a subject in respect of which such precision was relevant: the only such subject was cover. Secondly, the endorsement had a contractual purpose: identification of specific insureds, being an additional insured and an interested party. Thirdly, the word "estimated" does not tell against this construction: the day was estimated, it may be extended or shortened, but it would expire at 4:00pm. Fourthly, no rational explanation can be posited for such precision.

[21]

Liberty's submissions: ground 12: market evidence 148 Liberty submitted that the primary judge was correct in giving limited weight to Mr Bovington's evidence at J[80].

[22]

Liberty's submissions: ground 13: contra proferentum (sic) 149 Liberty submitted that the principle was a last resort and was unnecessary for resolution of the question of construction.

[23]

Consideration and determination of the cross-appeal 150 The first task involved in determining the contractual rights of the parties and in resolving the cross-appeal is construing the relevant policy: the 2015/2016 policy, and in particular the meaning and content of condition 15. Once the objectively determined meaning of the policy and condition 15 is understood, the second question arises as to whether condition 15 was invoked by Icon. This involves an examination of what was done by the parties up to and including the creation of the relevant endorsement for the Opal Tower Contract. One thus begins with the policy. 151 The principles applicable to the construction of policies of insurance are those governing the construction of commercial contracts. The principles are derived principally from High Court authority which has been discussed most recently in decisions in the Full Court in Todd v Alterra at Lloyd's Ltd [2016] FCAFC 15; 239 FCR 12 at 22-23 [42], and Chubb Insurance Company of Australia Ltd v Robinson [2016] FCAFC 17; 239 FCR 300 at 323-326 [98]-[104]. 152 The working out in a coherent and congruent fashion of the operation of a market specific insurance policy requires a businesslike interpretation to bring about a commercial result based on what a reasonable business person would have understood the policy to mean: Electricity Generation Corp v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at 656-657 [35]. The principle that a policy is to be construed so as to avoid it "working commercial inconvenience": Zhu v Treasurer (NSW) [2004] HCA 56; 218 CLR 530 at 559 [82] and so as to bring about commercial efficacy and reflect common sense: Gollin & Co Ltd v Karenlee Nominees Pty Ltd [1983] HCA 38; 153 CLR 455 at 464 is to be given concrete operation, not passing lip-service. To the extent that words used in an insurance policy have the capacity for broader or narrower operation, such constructional choice or ambiguity will be resolved by appreciating the context, including the market, in which the parties are operating, and the extent to which a reading of the words may produce commercial inconvenience or commercial efficacy as part of the ascription of meaning that would be made by a reasonable businessperson considering the language used, the surrounding circumstances known to the parties and the commercial purpose or objects of the policy as a whole to be secured: Electricity Generation Corp 251 CLR at 656-657 [35]; Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 at 737 [10]. It should always be recalled, however, that a broad or a narrow meaning of a policy may only reflect the breadth or the narrowness of cover that has been purchased by the premium: cf Australasian Correctional Services Pty Ltd v AIG Australia Limited [2018] FCA 2043 at [17]. Here, the construction that we prefer does not make any assumption about premium other than the ability of the insurer and insured to agree the rate applicable (expiring rates) in the operation of the annual policy and so condition 15. 153 Here, the market context known to the parties to the policy (Icon and Liberty) and to their respective experienced intermediaries was the provision of third party liability cover in the construction industry. From Mr Bovington's evidence it was clear that insureds such as Icon and insurers such as Liberty would be taken to understand that contractors (such as Icon) are required to maintain third party liability insurance during the construction period and the defects liability period. They would also be taken to understand that such insurance when purchased on an annual basis was generally purchased in one of two ways: on a contracts commencing basis or on a turnover basis, as explained at [16]-[17] above. 154 The form of policy here was in place from September 2012 until 2017. The relevant policy year was 2015/2016. By the commencement of that policy period a pattern had developed between the parties as to arrangement of cover, which we have set out. 155 The first and central question is whether condition 15 was sufficiently worded to be apt and available for use by Icon to give instructions for each contract commencing in the policy year to be covered by Liberty in accordance with the terms of condition 15, upon the payment of the agreed premium. 156 For reasons that substantially accord with the submissions of Icon, but which we will express in our own words, we consider that it was. 157 The insuring clause provided for cover during the policy period for any amounts Icon should become legally liable to pay third parties in respect of damage happening during the (nominated annual) period of insurance as a result of an occurrence in connection with its business. There was no provision that limited cover to contracts that were entered into during the period of insurance. Whilst Mr O'Reilly had told Mr Burgess in his email of 19 September 2012 (see para 47 of the Mr O'Reilly's evidence at [84] above) that the existing program was "contracts commencing" so all existing projects were to be run off under existing (that is, the previous) cover, there was no provision of the Liberty policy which excluded liability arising from contracts entered into in earlier years. Without such a provision the Liberty policy on its terms might respond according to its insuring clause even if another insurer who had taken the run off of the earlier program were liable. There would be possible double insurance and contribution. No attention was given in the primary proceeding or in the appeal to the nature of prior years' contracts before 2012. Of course, by September 2015, the three prior years' contracts had been insured with Liberty in the manner we have described and which is the subject of the dispute. 158 The annual turnover nature of the cover was reflected in condition 8 as explained at [23] above. 159 Condition 15 however, provided for run off cover up to and including the expiry of the defects liability period. We agree with the submission of Icon and the views of the primary judge at J[69] that a business-like construction of condition 15 is to be preferred to produce a reasonable and commercially efficacious result to permit the insured to obtain the benefit of cover under the condition for the life of the contract by giving instructions to identify contracts commencing prior to the expiry of the policy year and which are expected to be incomplete at the end of the policy year and by paying the additional premium on expiring rates. 160 The principal obstacle to this conclusion found by the primary judge was condition 8 and its premium structure and the use of endorsements: see J[80]-[87]. 161 We will explain why, in our view, the policy as a whole, and in particular the insuring clause, the premium clause, the adjustment of premium clause (condition 8) and the run off clause (condition 15) can be construed harmoniously and without commercial inconvenience to provide annual turnover cover, with run off cover that can be used in such manner as the insured may choose: to provide run off cover to a program, or to provide a form of contracts commencing cover upon giving instructions and paying premium. 162 The words of condition 15 require instructions from the insured to the insurer. Such was common ground. The words "subject to" should be read as subject to instructions being given, and not subject to instructions to the contrary. The instructions are to be given prior to expiry of the period of insurance. There is no textual or contextual basis to limit this to shortly prior to the expiry. Those instructions bring about the continuation of the policy on the terms and conditions prevailing immediately prior to expiry. These words do not limit the time at which instructions may be given, but make clear the continuation of the policy terms. The continuation of cover is for "all incomplete contracts as at the date of expiry". These words should not be construed to limit the operation of the provision. It is to be understood as "all incomplete contracts at the date of expiry" in respect of which instructions by the insured have been given. The policy is to continue in full force and effect "until completion of those contracts including any testing and/or defects liability and/or maintenance periods". A list is required, but such should be read practically and commercially. A series of instructions contract by contract is the equivalent of a list. The additional premium is calculated on expiring rates applied to the value of works declared for completion of projects after expiry of the period. There is no textual or contextual reason to limit these words, and by so doing, limit the operation of the whole provision, to one total value of works of all incomplete contracts after expiry of the policy as "additional" premium to the annual turnover calculated under condition 8. The commercial purpose is clear: premium must be paid for the whole value of work. That could occur by the value of work (the turnover) in the policy year being taken up in a premium calculated by the mechanism in condition 8 and the value of work for the balance of the contract being taken up in the "additional premium" calculated under condition 15 at expiring rates. It could also occur by the whole value for the life of the contract being taken up in a premium at the rate applicable as the expiring rate under the contract. That will be an "additional" premium to that charged for the annual policy period that has been agreed by insurer and insured, premium being "as agreed". 163 The title of the condition "Run Off" does not, in our view, dictate a narrow view of the operation and place of condition 15 in the policy, as submitted by Liberty. Its terms are sufficiently wide to allow the utilisation by an insured contract by contract. There is no commercial inconvenience to either party in such a construction, indeed there is every commercial convenience of flexibility of operation of the policy suitable to the affairs of the insured at the price of an appropriate premium. 164 The words of condition 15 are not so intractable or rigid as to limit its possible use to one set of instructions, shortly prior to expiry for all unexpired contracts. The giving of instructions to identify contracts that will be incomplete at expiry of the period and the payment of premium based on the value of the whole of each contract conveniently enables an insurer to offer and an insured to take up, if it desires, a form of contracts commencing cover arising out of and rooted in an annual turnover policy. The commercial flexibility for both insurer and insured is clear. To construe condition 15 as limited in its possible use to instructions at the end of a program of annual turnover cover as contended for by Liberty (see [25] and [140]-[143] above) would be to limit the operation of general words and limit the commercial utility of the policy, for both insurer and insured. What would be the point, one might ask, in requiring for the engagement of condition 15 a list at the end of the policy period of all incomplete contracts, a calculation of adjusted turnover premium for condition 8, and a separate premium calculation for the future work based on the value of uncompleted work? It would only delay until the end of the policy period the exercise of the insured's right to engage the provision and delay the commercial certainty for the insured of the cover for the life of the contracts according to the terms of condition 15, and delay the receipt by the insurer of a substantial part of the premium referable to the life of the contract after the end of the policy period. There is nothing in the words of condition 15 which demands that course; just as there is nothing in the words of condition 15 to constrain the use of the provision to any particular commercial circumstances that explain its engagement by the insured. 165 It can be accepted that the insured would, upon the invocation of condition 15, obtain a form of cover that has elements of annual turnover and contracts commencing cover. There being no retroactive clause or exclusion limiting the cover under the insuring clause to contracts entered into during the period, the insured was entitled to annual cover for liability from damage within the period as a result of an occurrence in connection with the insured's business for past contracts, as well as for cover for the life of the contracts in respect of which instructions had been given under condition 15. Whether in Icon's commercial position this was likely was not explored in the evidence or argument on appeal. Certainly by September 2015 there would have been few if any contracts on Icon's books not the subject of instructions under condition 15. Even if there were some risks, that was a matter for the parties to consider in striking a premium for the annual cover. Over time, as a matter of commercial reality, assuming all contracts were declared year on year, the policy would operate effectively as a contracts commencing policy. 166 The nature of such cover arose from the express terms of the cover: annual turnover cover plus run off cover, upon instructions. 167 The cover was to be paid for by premium. The policy provided for flexibility in fixing premium. It was always to be "as agreed". Condition 8 provided for the adjustment of annual turnover based premium. Upon the invocation of condition 15 an additional premium was to be paid referable to the declared value of work. It was "additional" to such premium as might be charged for the annual policy cover, other than the cover for the individual contracts declared. The parties were free to strike a premium for the annual cover (not excluded by the lack of a retroactive date exclusion), in addition to which a premium was due for the total value of the contract declared at expiring rates. It is also possible to conceptualise the premium to which that under condition 15 was additional as not only the premium for annual cover struck by the parties, but also that part of the premium for the life of the contract referable to the value (and in that sense turnover) of the contract in the policy year. Such different ways of conceptualising the premium under condition 15 to the premium for the annual cover should not in a practical business sense detract from the convenient operation of condition 15 and the commercial reality that the premium for the declared contract under condition 15 is additional to whatever premium is agreed for the annual policy, which is open to the parties to strike. 168 Liberty submitted that if Icon's construction were correct it was obtaining cover during the policy period and under condition 15 and this meant it was getting the annual cover "free". We reject this criticism. The policy provided for such duality of cover. It did not mean cover for the annual policy period was "free", as Liberty submitted. The insurer was entitled to a premium "as agreed" for the annual cover. It was for Liberty to request such premium on an annual basis and for it to be agreed. 169 The setting of premium as in fact occurred illustrates the position. From 2013, a small deposit premium was taken at the commencement of the period based on $50 million which was set off or deducted against the additional premium when contracts were declared: see agreed facts [23] and [24] set out at [95] above. Icon also submitted that in the relevant policy year this set off was limited to 25%: see the "premium return" limitation at [100] above. Such a clause did not appear in earlier renewal offers. It appeared in condition 8 of the 2015 policy: [20] above (and in the 2014 policy). It did not appear in the 2012 draft wording. No attention was given to when this part of condition 8 entered the policy wording. Whether or not such a limitation of the set off of the deposit premium occurred in each year, the point is that it was open to Liberty to charge a premium for the annual policy cover in addition to which the premium for the condition 15 life of contract cover would be charged. 170 Thus, in our view, and contrary to the conclusion of the primary judge, condition 15 was wide enough to be invoked conformably and harmoniously with condition 8 and the balance of the policy by Icon giving instructions for run off cover for individual contracts, contract by contract, at its choice. The risk undertaken by Liberty is then "housed" (to use a phrase in Liberty's submissions) in the annual period and in the period identified by condition 15 in respect of each contract the subject of instructions. 171 Did the parties invoke condition 15? This question is to be answered by an examination of what the parties actually did. Such examination is not the impermissible utilisation of extrinsic evidence in the process of construction. 172 The evidence of Mr O'Reilly, which was accepted by the primary judge, was clear. He wanted a form of contracts commencing policy. He had run off under a previous program for existing contracts. (Whether or not, without a retroactive date provision that was enough to shield the Liberty policy from claims from pre-September 2012 contracts need not be considered further.) He raised his concerns about the appropriateness of the Liberty policy for his and Icon's commercial wishes with Mr Burgess. The conversations with Mr Burgess set out at [84] above were clear. Mr Burgess pointed to condition 16 in the draft wording for the 2012 policy (which was in identical terms to condition 15 in the 2015 policy) and agreed that the invocation of this condition effected the desire of Icon for contracts commencing cover. We emphasise that is not evidence admissible in the construction of condition 15. The conversations were "statements and actions of the parties reflective of their actual intentions and expectations" and so are "not receivable" in the process of construction: Codelfa 149 CLR at 352. But it is direct and cogent evidence to explain what Mr O'Reilly was thereafter doing in giving instructions about individual contracts. He was, on behalf of Icon, invoking or seeking to invoke condition 15. He was doing so with the knowledge of Mr Burgess. 173 It is unnecessary to explore with any refinement any express or implied or ostensible authority of Mr Burgess in this regard. The meaning of the policy is not in issue. It has the meaning which we have described. Though not relevant for the process of construction, that appeared to be the view of the operation of condition 15 (as it became) that was held by Mr Burgess. In any event, he was told in effect, by Mr O'Reilly that the condition would be invoked, as was Icon's right under the policy. Mr Burgess was Liberty's agent. He was plainly an agent whose remit extended to passing on relevant information conveyed by the insured in regard to the policy, and its operation. See also [321] below as to the conversation between Mr Hingston and Mr Burgess concerned with effecting Icon's wishes. 174 After this discussion in 2012, Icon routinely gave instructions about individual contracts to be given life of contract cover. There is no reason why these instructions should not be seen as directly referable to condition 15. That is, in effect, what Mr O'Reilly said they would be, after Mr Burgess pointed out the availability of the condition. The instructions began in 2012. They concerned 48 contracts up to 2017. In some, but not all, endorsements were issued. Some of those endorsements had been provided before December 2015 when instructions were given on the Opal Tower project (see [103] above.) 175 The first and fundamental consideration in examining and understanding the place of each endorsement was that upon the relevant instructions being given there was a contractual right to cover extending beyond the annual period in relation to that contract. That consideration does not deny, necessarily, the utility (practical and commercial) nor the contractual nature (to the relevant degree) of the endorsement. 176 In circumstances where an insured is from time to time to give instructions about new contracts in order to engage cover for the life of such contracts, there is every practical and commercial reason for the sake of good order to document such instructions into a form of endorsement which will fit with the policy, not altering its terms. There are also reasons (contractual in nature) beyond mere clarity and good order for the issue of endorsements. Each new contract is likely to have new interested parties: the principal under the contract, any financier of the project, and other possible interested parties. It may well be appropriate to issue an endorsement to provide such parties and Icon with a document referable to the policy of insurance, and embodying enforceable rights. 177 In such a context it is necessary to consider the endorsement concerning the Opal Tower project: see [106]-[109] above. 178 The endorsement was headed with a statement of "noted and agreed" that the policy was "amended to include the following contract, with amendments as detailed herein". That does not deny the document's status as the perfection of the invocation of a right given under condition 15. Indeed its form is conformable with condition 15. Under condition 15 the giving of the instructions "continues" the policy until completion of the contract including any defects liability period. Thus the "Period of Insurance" in the "Interest Insured" wording in the endorsement (see [108] above) is to be understood as the annual period as extended by the invocation of condition 15. 179 No part of the endorsement purported expressly to deal with any extension of, or variation to, the period of insurance. None was necessary: such was effected by the invocation of condition 15. We consider that the primary judge erred in construing "Estimated Project Period" and that which appears adjacent to it as a variation of the period of insurance for the contract up to, but not past, the date of practical completion (10 August 2018 at 4:00pm local standard time). We accept the oddity of such a precise "estimation", but the words of the endorsement are clear: "Estimated Project Period". There is no part of the document that expressly deals with, let alone extends the period of insurance. It was unnecessary contractually to do so: such was effected by the invocation of condition 15. Further, Icon having invoked condition 15 and become liable for a premium according to its terms, there is no contractual or commercial purpose in construing words that refer to the estimated period of the project as contractual to cut down the clear words and effect of condition 15, and so cut back on the cover. 180 For these reasons, we would allow the cross-appeal. The declarations sought in the Further Amended Notice of Cross-Appeal were as follows: 1. Icon has obtained run off insurance cover from Liberty under Condition 15 of the Liberty Policy for the Opal Tower with the consequence that the terms and conditions of the Liberty Policy continued to apply to the Opal Tower as at the time of the Incident on 24 December 2018; and 2. the Incident reflects or was the result of an Occurrence in connection with the Insured's Business within the meaning of the Liberty Policy that occurred within the period of cover of the Liberty Policy. 181 Declaration (a) sought was not as to an entitlement to indemnity. No doubt that was deliberate to avoid any debate about pre-emption of Liberty's rights under the policy as the underlying claims work themselves out. The form of declaration (b) was not addressed on appeal. It reflects however declaration 6 made by the primary judge in respect of the rectified policy. Thus, there would appear to be no reason not to deal with the subject in the orders. It is necessary to set aside orders 1 and 2 and declaration 6 made by the Court on 26 October 2020, irrespective of the merits of the appeal.

[24]

The LIBERTY appeal 182 The above conclusions mean that it is unnecessary to resolve the appeal, other than by setting aside the orders made by the primary judge as they are inconsistent with orders that appropriately reflect Icon's rights under condition 15 and success on the cross-appeal. Given, however, the detailed argument on this appeal we propose to address the appeal of Liberty. 183 The rectification claim was predicated upon the view that condition 15 was not apt to be invoked contract by contract to cover projects declared within the annual period of insurance.

[25]

The terms of the rectification pleaded 184 At J[107]-[108], the primary judge set out how the matter was pleaded by Icon: 107. Prior to setting out the legal principles relevant to rectification, and considering the evidence and making relevant findings, it is instructive to set out Icon's articulation of its alleged equity. Icon relevantly pleaded the following in relation to the Rectification Claim: 46 At the time that the Liberty 2015/16 Annual TPL Policy was entered into on 18 September 2015, it was the common intention of both Icon and the Icon Group (acting through their agent Austbrokers) and Liberty (acting through their agent Chase) that the Liberty 2015/16 Annual TPL Policy would apply during the Construction Period and the Defects Liability Period of any project: (a) commenced by Icon or the Icon Group during the Period of Insurance; (b) declared by the Icon Group to Liberty; and (k) for which an additional upfront premium was calculated by Chase (as agent for Liberty) based on the total project value and paid by the Icon Group. … 47 The common intention of both Icon and the Icon Group (acting through their agent Austbrokers) and Liberty (acting through their agent Chase) as pleaded in paragraph [46] was not reflected in the written terms of the Liberty 2015/16 Annual TPL Policy by reason of mutual mistake by both Icon and the Icon Group (acting through their agent Austbrokers) and Liberty (acting through their agent Chase). 48 By reason of the matters pleaded in paragraphs [46] and [47] above, the Liberty 2015/16 Annual TPL Policy should be rectified by adding an endorsement to the effect set out in Annexure "A" to this Statement of Claim. 108. Annexure "A" then set out the Contracts Commencing Endorsement (see [38] above), with one amendment. That amendment was to change the defined term "Construction Period" to provide that that period was to be "36 months any one Contract Including any testing and commissioning period", instead of 24 months (Annexure "A" Endorsement). In all other respects, the Annexure "A" Endorsement was identical to the Contracts Commencing Endorsement. 185 The Contracts Commencing Endorsement was set out at J[38] ([34] above). It is to be noted that the claimed common intention provided for indemnity in the insuring clause for liability for damage happening during the period of insurance (1(c)1.2) as well as during the Construction Period (1(c)1.1). 186 At J[109], the primary judge noted how the rectification was particularised in the further amended statement of claim: (1) discussions between Mark O'Reilly of Austbrokers and Adam Burgess of Chase in early- to mid-2012 prior to the Icon Group first obtaining its insurance through Chase which were said to be to the effect that, for both the "Material Damage Contract Works" and "Third Party Liability" insurance policies, coverage would be provided on a project by project basis with each project being separately declared and an upfront premium calculated for each project on declaration; (2) the fact that, at all times between approximately 2012 and 31 December 2018, Icon (through Austbrokers) had declared to Liberty and QBE (through Chase) each of Icon's projects as and when it had been awarded and Chase had calculated an upfront premium based on the total contract value which the Icon Group had paid upfront on declaration; and (3) a conversation between Mark O'Reilly and Adam Bortone, at the time when Chase included the Contracts Commencing Endorsement in the 2017/18 Chase TPL Policy Wording, to the effect that that endorsement was simply confirming and recording the basis upon which both Austbrokers and Chase had previously been acting in relation to the "Third Party Liability" insurance coverage for the Icon Group

[26]

General principles as to rectification 187 At J[111]-[118], the primary judge set out the relevant general principles concerning the necessary proof for rectification. To the extent that these principles are relevant, we will deal with them later in these reasons.

[27]

The authority of the agents, Austbrokers and Chase, and the attribution of their respective knowledge to Icon and Liberty: Whose intention was relevant? 188 At J[119]-[159], the primary judge dealt with the question of whose intention was relevant. Each party (Icon and Liberty) had an agent (Austbrokers and Chase). 189 At J[120], the primary judge drew the relevant applicable principle on attribution from the judgment of Ipp JA (with whom Santow J agreed) in Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280; 61 ATR 593 at [78]-[80] as follows: In Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 Handley JA (with whom Meagher JA and Powell JA agreed) after referring to a number of authorities, including Blackburn Low & Company v Vigors (1887) 12 App Cas 531, said that where an agent is authorised to commit the principal to a transaction and the agent's state of mind is relevant to that transaction, "the acts of the agent are the acts of the principal and the agent's state of mind must be the state of mind of the principal as well." The decision of the Court of Appeal in Permanent Trustee Australia Co Ltd v FAI was reversed by the High Court on different grounds: (2003) 214 CLR 514. Gummow and Hayne JJ, however, (at 548 [87]) approved the following statement of Handley JA: "Where the agent acts within his authority with the knowledge and question present to his mind, the principal should be bound by that knowledge, however acquired. I see no basis for ignoring any part of the agent's knowledge, present to his mind, when he is doing the authorised act. The source of the knowledge seems irrelevant. What must matter is the agent's state of mind when doing the authorised act." As is apparent from Permanent Trustee Australia Co Ltd v FAI, the same principle governs the intention of the agent. Thus, where the agent acts, with a particular intention, within his or her authority, that intention is attributed to the principal. 190 The primary judge turned then to the authority of each agent. He began (at J[123]-[133]) with Austbrokers.

[28]

Agency of Austbrokers 191 Icon called three senior executives: Mr Sisson, the Chief Financial Officer (Victoria) of Icon Corporate Services Pty Ltd, Mr Ford, the Group Chief Financial Officer of Icon Corporate Services Pty Ltd, and Mr Murdoch, the Group Chief Financial Officer. Their evidence was similar. They relied on the broker. Mr Murdoch was responsible for making decisions about Icon Group's insurance program. Mr Sisson was involved in making decisions about recommendations. Mr Ford had responsibility for insurance requirements in respect of particular projects. None read the policy. Mr Murdoch's evidence encapsulated the matter: Each year, in the lead up to the renewal of the annual insurance policies, the insurer/s would send through a renewal package. The renewal package required us to provide various data. My department was responsible for completing the forecast or historical data. My department provided that information to Icon's insurance broker, Austbrokers. I relied upon Austbrokers to work out the best policy to suit Icon's needs. I dealt with Mark O'Reilly at Austbrokers as Icon's principal broker. I provided Mark O'Reilly with actual and forecast information in relation to renewals of Icon's insurance program. Mark then usually prepared and sent to me a "Renewal Report" outlining his recommendations each year. Sometimes I met with Mr O'Reilly prior to the insurance being placed. Mr O'Reilly would say words to the effect "these are the three alternatives, and this is the one I recommend that you go with". I cannot recall any occasion on which Icon did not accept Mr O'Reilly's recommendation. I did not have much discussion with Mark O'Reilly about the policy wordings. I did not read the policy wording. I am not an insurance lawyer. I relied upon Mr O'Reilly's expertise in that regard. I cannot recall ever meeting with anyone from Liberty or QBE in relation to insurance for the Icon Group. 192 At J[127]-[129], the primary judge dealt with Mr O'Reilly's evidence as to agency. He had worked as a broker for the Icon Group from 2001-2006 and from 2009-2018. There was no formal agency agreement between Icon and Austbrokers. Renewal Reports would be provided each year. Mr O'Reilly's evidence, which was not challenged, was set out at J[127]: The insurance program for the Icon Group was coordinated by Nick Murdoch, who was Chief Financial Officer for the whole group, and I routinely dealt with Nick Murdoch in relation to the annual renewal of the Icon Group's insurance program. I also dealt with different Chief Financial Officers in the different states in relation to the annual renewal of the Icon Group's insurance program, as well as in relation to insurance requirements for projects commenced in their respective states. Between 2012 and 2018, the Chief Financial Officer for Victoria was Michael Sisson, the Chief Financial Officer for New South Wales was Andrew Ford, and (after the Icon Group expanded into Queensland) the Chief Financial Officer for Queensland was Ron Waldron. I routinely prepared a Renewal Report for the Icon Group in relation to the annual renewal of its insurance program. The Renewal Report that I prepared set out details of approaches I had made to the market with respect to the Icon Group's insurance requirements, and my recommendations as to the placement of cover. The annual Renewal Report that I provided to the Icon Group also set out the fees that would be payable by the Icon Group to Austbrokers for acting as its insurance broker. There was no other written document recording the terms on which Austbrokers acted as insurance broker for the Icon Group. I provided the Renewal Report to Nick Murdoch, Michael Sisson and/or Andrew Ford, and we would then usually speak on the phone to confirm the Icon Group's instructions. I cannot recall any occasion during 2012 to 2018 when the Icon Group did not accept my recommendation in relation to the placement of cover. 193 The procedure for individual projects was described by Mr O'Reilly and set out by his Honour at J[129]: As to the specific projects declared by Icon through Mr O'Reilly to Liberty, via Chase, once Icon entered into a new project, Icon provided what Mr Ford described as a "pro forma set of information" in relation to that project, including the parties, the project value, the project duration and the defects liability period, and the number of storeys and basement levels. Mr O'Reilly then declared that information to Chase (as outlined above at [30]-[33]), Chase would confirm that cover was in place for the project either via an email or an endorsement, Mr O'Reilly would invoice Icon in respect of the project premium, and would then issue it with an insurance certificate. 194 At J[130]-[133], the primary judge rejected Liberty's submission that Mr O'Reilly's intentions were irrelevant. Icon, the primary judge concluded at J[131], intended to enter the policies recommended by Mr O'Reilly, which Mr O'Reilly had the authority to negotiate. The primary judge concluding at J[131]: … Mr O'Reilly was the driving force and the real decision maker of the transactions, where Icon did not sign anything or read any of the policy wordings and was entirely content to trust the expertise of Mr O'Reilly. It is thus the case that Mr O'Reilly was the person "whose job it was to make the required business judgment as to the terms upon which [Icon] should contract", being the decision maker rather than a person conducting a "mere negotiation": Perpetual Ltd v Myer Pty Ltd [2018] VSC 2 (at [106] per Croft J, upheld on appeal in Perpetual Ltd v Myer Pty Ltd [2019] VSCA 98 per Whelan, Niall and Hargrave JJA); Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185 (at [198] per Applegarth J); Thiess Pty Ltd v FLMIDTH Minerals Pty Ltd [2010] QSC 6 (at [126] per McMurdo J); Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55 (at [41] per Patten LJ, Etherton and Rix LJJ agreeing). 195 His Honour continued at J[132]-[133]: 132. In NIML Ltd v MAN Financial Australia Ltd [2006] VSCA 128; (2006) 15 VR 156, Nettle JA discussed the rule of agency that, where an agent is authorised to enter into a transaction in which his own knowledge is material, the agent's knowledge may be attributed to the principal. Relevantly for present purposes, his Honour said (at 169 [43], Buchanan JA and Bongiorno AJA agreeing): It is based or at least based in part on the idea that there are occasions in which an agent may be an agent to know. It applies among other situations where an agent retains a principal because the principal expects that the agent's knowledge will be of benefit to the principal in connection with the transaction in view. Thus, for example, where an insured retains a broker, the insured generally expects that the broker will use the knowledge which the broker has acquired in the insurance market to obtain more favourable terms than the insured could secure for itself. In those circumstances the broker is an agent to know and thus the agent's knowledge will bind the principal. 133. Mr O'Reilly's knowledge and intentions were material to the transactions. Applying the principles explained in NIML and Igloo Homes, Mr O'Reilly's particular intentions when entering into the policies and in negotiating and contracting with Chase should be attributed to Icon. Accordingly, it is Mr O'Reilly's intention that is relevant in conducting the relevant inquiry.

[29]

Agency of Chase 196 At J[134]-[159], the primary judge dealt with the agency of Chase and the attribution of its knowledge (principally that of Mr Burgess) to Liberty. At J[135]-[137] the primary judge summarised the terms of the written agency agreement between Chase and Liberty as follows: 135. By virtue of cl 2.2 of the agreements, it was expressly provided that Chase must not, without Liberty's prior written consent, do or permit to be done anything on behalf of Liberty that it is not expressly authorised to do or permit under the agreement. Clause 4 was headed "Services", under which cl 4.1 set out a series of "authorisations". By cl 4.1(e), only two named individuals had authority to act as agents of Liberty under the agreement, being Mr Adam Burgess and Mr Adam Bortone. By cl 4.1(a), Chase was authorised to act as agent to provide quotations, issue certificates of currency and policy documentation in respect of contracts of insurance of the type annexed as the policy wordings, which included the wordings which became the Liberty Policy between Liberty and Icon. Chase was also authorised, by cl 4.1(f), to provide an insured with policy documentation, including policy wordings, policy schedules, certificates of insurance and any endorsements. 136. Clause 5.2 provided that Chase must refer to Liberty any request for, or query relating to, insurance business that it was not expressly authorised under the agreement to process or to respond to. Clause 5.1 placed a similar and more specific restriction, being that Chase could not, without Liberty's prior written approval, extend the period of insurance of any insurance business other than as provided for in the Underwriting Guidelines. Those guidelines did not, in terms, provide for any extension period, but did place a restriction on renewals without prior referral to Liberty in relation to those risks that were up to $50 million. The guidelines also provided that Chase was only authorised, without referral to Liberty, to provide quotations for risks up to $15 million. 137. Clause 4.1(f) was also subject to the guidelines. The guidelines set out a list of endorsements, including specific exclusionary endorsements for certain kinds of activities, such as airport works and underground services, and extensions of cover for other types of activity. No "contracts commencing endorsement" was set out in that list of endorsements. 197 At J[138], the primary judge noted that there was documentary evidence that made it clear that Chase was aware of the need for approval of renewals and quotations above the relevant monetary limits. 198 At J[139]-[142], the primary judge dealt with the "critical period" of September 2012 up to and including September 2013, being, his Honour said at J[139] (referring to September 2013): … when Icon's payment of the premium changed from being by reference to Condition 8, based upon turnover, to paying for a deposit premium which was then offset or deducted against the premium payable when projects were declared under the relevant annual policy. There was a dispute between the parties as to whether this occurred in 2012, or 2013. It will be necessary to return to this change more fully when dealing with the evidence as to whether any Contracts Commencing Intention was formed between the parties, but for present purposes, the following may be noticed. 199 Mr Hingston's evidence was that it was in September 2013 that he had a conversation with Mr Burgess (as recounted by the primary judge at J[140]): ….in which Mr Burgess informed him that Icon did not want to pay on a turnover basis as "turnover" was defined in the annual policy, and that, instead, Icon wanted to pay a deposit premium based on projects worth $50 million at the start of the annual policy and then an additional premium for each project that was declared based on the total contract value upfront. Mr Burgess informed Mr Hingston that the relevant projects, being projects for which an additional premium was paid, would be covered under the annual policy then in place for the period of the relevant projects. 200 At J[141]-[142], the primary judge further found as follows: 141. Mr Hingston ultimately confirmed that he had agreed to Icon's request put forward by Mr Burgess, and further agreed that he knew that Mr Burgess had been discussing those changes with Austbrokers, and that after he confirmed his agreement to those changes, he left it to Mr Burgess to confirm the nature of the changes with Austbrokers. 142. There was also in evidence an endorsement to Liberty's standard policy wording in respect of another client, drafted by Chase and amended by Mr Hingston, along with emails between Mr Hingston and Chase during the drafting process. That endorsement was drafted in December 2014, to take effect on the relevant policy from September 2013. Importantly, the endorsement was described as a "Contracts Commencing Endorsement", and Mr Hingston agreed that by that time Liberty had an approved form of Contracts Commencing Endorsement that it had approved Chase to use. 201 At J[143]-[146], the primary judge made findings as to the scope of Chase's actual authority. After setting out the parties' contentions, the primary judge set out at J[145]-[146] that Chase had authority to write insurance outside the scope of the annual turnover policy and involving contracts commencing cover: 145. That the Agency Agreements operated to limit Chase's authority may readily be accepted. However, in ascertaining the scope of Chase's actual authority, attention must not only be directed to the precise terms of that authority by reference to the Agency Agreements, but also to the evidence given by Mr Hingston. That evidence indicates that Chase was authorised by Liberty to write insurance business for Icon in September 2013 outside the scope of the agreed policy wording, and Mr Hingston accepted as much: see T319-20. Further, it is clear that Chase was authorised to finalise the details of that business for Icon. In such circumstances, it cannot be said that Chase was a "mere negotiator": see Perpetual Ltd v Myer Pty Ltd [2018] VSC 2 (at [106] per Croft J). 146. Chase's actual authority extended to the provision of contracts commencing policies, in circumstances where Mr Hingston admitted in cross-examination that between 2012 and 2015 his understanding was that contracts commencing policies provided cover until the end of the defects liability period. On this basis, its intentions are to be attributed to Liberty for the purposes of ascertaining whether there was a common intention held between the parties for the purposes of the Rectification Claim. 202 The cross-examination of Mr Hingston at Tpp 319-320 to which the primary judge made reference in J[145] concerned the conversation with Mr Burgess, that Mr Hingston said occurred in September 2013. The relevant parts of his affidavit were as follows: 77. In around mid-September 2013, I received a call from Adam Burgess to discuss the Icon account. During the call, Adam said words to the following effect: 1. Icon didn't want to pay for their annual policy up front anymore because they don't want to commit to a particular estimate of turnover as they did not know which tenders they would win and wanted to mitigate their costs; 3. Icon wanted to pay a deposit premium of $50 million to start the annual policy off, and then would declare the turnover anticipated from each project as each was secured and it would be declared into the annual program; 4. As Icon would be paying for the turnover of each project up front, that project would be covered under the annual policy then in place. 78. I did not understand this new method of payment of premium to be a change from the basis of cover being offered to Icon or as a request for "run off" cover by Icon. The value of contracts to be commenced by an insured is essentially the same as the turnover of an insured, except that it is turnover which is earned over an extended period of insurance. 79. As I explain further below, once I started receiving declarations of various projects from Chase, the language used in the emails sent to me was consistent with my understanding that the extended period of insurance being requested in each endorsement was until practical completion of each project declared to Liberty. These emails seeking endorsements consistently referred to a specific date through to which cover was required… 203 Mr Hingston's evidence in cross-examination at Tpp 318-320, referable to these paragraphs of his affidavit and which is also important for further discussion (see [320]-[322] below) was as follows: And you would agree with me that what Mr Burgess was telling you in this conversation that you give evidence about in paragraph 77 was, first, that Icon didn't want to pay on a turnover basis as turnover was defined in the annual policy wording?---Yes And the second thing that Mr Burgess was telling you in this conversation was that, instead, Icon wanted to pay a deposit premium based on projects worth $50 million at the start of the annual policy and then an additional premium for each project that was declared based on the total contract value upfront?---Yes. And the third thing that you understood Mr Burgess to be telling you was that the effect of this was that the relevant projects, being the ones for which an additional premium was paid, would be covered under the annual policy then in place?---Yes. And you say in paragraph 78 that you did not consider this to be a request for run-off cover, under the run-off condition of the annual policy wording. That's the evidence that you give; correct?---Yes. So if we forget the run-off condition for one moment, then. You agree that what Mr Burgess was proposing in that telephone discussion was different to the scheme of cover set out in the annual policy wording that Liberty had previously authorised Chase to use?---It's not different - the basis cover is no different. The - the method by which we attach the projects is slightly different. The wording is the same. And the policy - and the premium calculation was different?---The premium calculation is essentially the same. The project value and the turnover is interchangeable. The turnover is earned over an extended period. It's the same as the project value. So you're using the same adjustment rate. You're just anticipating that the project value, whilst, you know, is not earned over two or three years, equates to the same as the turnover for the life of the project. But that's not right at all, Mr Hingston, is it, because under the annual policy wording of Liberty, the turnover, as it's defined - if the premium is calculated on the basis of the turnover, it's only calculated on the basis of that portion of the work that you do on a project that happens during that 12-month period; correct?---And in this - correct. And in this case the period of insurance becomes an extended period, beyond the 12 months that we've agreed by endorsement. Yes. So that also - the period of cover that Mr Burgess was raising with you in this conversation, that was also going to be different to the annual policy wording - standard annual policy wording that Liberty used, wasn't it? ---The period of cover is different by endorsement, but the basis of the wording is the same. Well the fact is you understood Mr Burgess to be proposing something in this conversation that was different to what was set out in Liberty's approved annual policy wording?---No. We have the avenue to endorse the policy whenever we want to extend the period of insurance. The basis of cover is the same. He's not -he's not proposing an amendment to the policy wording. I'm not talking about endorsement for the moment, Mr Hingston?---Yes. I'm talking about our annual policy wording?---Yes. I want to suggest to you, quite clearly, that Mr Burgess has called you up in this conversation and in this conversation he's telling you that Icon wants to do something different to what's in the annual policy wording; that's right?---Yes. And the things they wanted to do differently, were, they wanted to pay the premium on a different basis; correct?---Yes. And they wanted to get cover for a different period; correct?---Yes. And the period that they wanted to get cover for was the period of the relevant projects; correct?---Yes. And you agreed to those changes that Mr Burgess was requesting for the Icon policies, didn't you?---Yes. And you knew that Mr Burgess had been discussing those changes with Icon and its brokers?---Yes. And you knew that what he was relaying to you was a request from Icon?---Yes. And after you told Mr Burgess that you agreed to those changes, you left it to him to confirm the nature of changes with Icon or its broker, didn't you?---Yes. You didn't attempt to clarify the nature of those changes directly with Icon or its broker?---No, we had no direct contact with the retail broker or Icon. No. You just left it to Mr Burgess, didn't you?---Yes. And as you say, you never dealt with anyone at either Icon or its broker in relation to these policies?---No. And you agree with me that in your discussions with Adam Burgess back in September 2013, that you give evidence about in paragraph 77, there was no discussion as to whether projects declared and paid for would be covered under the terms of the annual policy for the construction and defects liability period or just for the construction period? There was no - - -?---There was no mention of that, no. 204 At J[147]-[156], the primary judge also dealt with the ostensible authority of Chase and concluded at J[147] that Chase had sufficient ostensible authority such that Chase's intentions, through Mr Burgess, were attributable to Liberty. In so concluding, the primary judge rejected (at J[148]-[152]) the contention of Liberty that apparent or ostensible authority was not a basis for attribution of intention for the equitable remedy of rectification, as distinct from the operation of the common law doctrine referable to contract law. 205 At J[153]-[156], the primary judge dealt with Chase's position and concluded (at J[156]) that Chase had ostensible authority to provide contracts commencing policies and thus its intention was to be attributed to Liberty. The primary judge's findings were at J[153]-[155], as follows: 153. The evidence sufficiently establishes that Mr Burgess had been held out to negotiate and agree the terms of the changed operation of the policy. The most telling evidence supportive of this conclusion is that Mr Hingston left it to Mr Burgess to work out the details for Icon. 154. In Western Australian Insurance Company Limited v Dayton (1924) 35 CLR 355 (at 376), Isaacs ACJ said: If a person is constituted or held out or adopted by an insurance company as its agent in respect of any insurance transaction, whether it consists in the making of a contract or the receipt of a premium, or the preparation of a proposal or otherwise, then, except to the extent of any restriction upon his agency which is communicated to or known or reasonably to be inferred by the person with whom the transaction takes place, the transaction stands on the same footing as if it had been transacted in precisely the same circumstances at the head office. 155. It is clear from this statement that such a restriction on that agency must be communicated to or known or inferred by the other contracting party to disprove the scope of the alleged ostensible authority: see also Dal Pont, G E, Law of Agency (LexisNexis Butterworths, 3rd ed, 2014) (at 479-86 [20.39]-[20.47]). There is no evidence before me that either Liberty, or Chase, communicated such a restriction. Indeed, as I will deal with in some detail when considering the evidence in respect of whether there was a formation of a Contracts Commencing Intention, the evidence of Mr O'Reilly was that Mr Burgess reassured him of the operation of the policy, and at no time communicated that his authority was limited. 206 At J[157], the primary judge noted that the intention of Mr Hingston was, uncontroversially, relevant. 207 At J[158]-[159], the primary judge noted another relevance of the intention of Chase. In circumstances where the relevant intention was held by Mr Hingston (as his Honour later found) such intention still had to be communicated objectively. That could only be done by Chase, since Liberty did not deal with Icon or Austbrokers. The primary judge explained this at J[158] and J[159]: 158. … [T]he relevance of Chase's intention remains critical, notwithstanding any intention found to be held by Mr Hingston, for the reason that, for the purposes of rectification, what is required to establish the requisite common intention is that some form of disclosure of that intention have occurred between the parties: Ryledar (at 660 [280] per Campbell JA, Mason and Tobias JA agreeing); see also Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 (at 431 per Yeldham J), discussed by Kiefel J (French CJ agreeing) in Simic (at 103 [43]-[44]). As Campbell JA said in Ryledar (at 667 [315]): If two negotiating parties each had a particular intention about the agreement they would enter, and their intentions were identical, but that intention was disclosed by neither of them, and they later entered a document that did not accord with that intention, what would be the injustice or unconscientiousness in either of them enforcing the document according to its terms? 159. That disclosure need not be by express statement but it must be the subjective intentions of the parties, viewed objectively from their words or actions: Simic (at 117 [104] per Gageler, Nettle and Gordon JJ)). As I will explain further below, such disclosure may take place by means of the parties inferring certain things of the other by reference to assumed, well established business practices: Franklins (at 660 [281] per Campbell JA). In circumstances where it was agreed that neither Icon, nor Austbrokers, had any dealing directly with Liberty or Mr Hingston, it seems to me that in order to find that such a common intention was held it is necessary to determine whether such disclosure occurred between Austbrokers and Chase.

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The intentions of the various actors 208 The primary judge approached the matter by summarising the evidence bearing on the intentions of Mr O'Reilly, of Mr Burgess and of others at Chase (Mr Burgess did not, however, give evidence) and Mr Hingston, and then making findings about the issue of common intention.

[31]

Mr O'Reilly's evidence 209 We have already set out (at [74]-[109] above) in some detail the communings between the parties leading up to the taking out of the 2015/2016 policy and the declaration of the Opal Tower Contract. 210 The primary judge dealt with the cross-examination of Mr O'Reilly at J[165]-[169]. At J[168] the primary judge said: … The cross-examination only went so far as to suggest Mr O'Reilly was confused between the two policies, and that the passage of time, and litigation stress, may have affected his memory. In these latter respects, Mr O'Reilly did not accept that in the intervening eight years he had not had cause to give any thought or attempt to recall the conversation with Mr Burgess. He said he recalled it quite vividly because he felt that he had not initially read the policy wording correctly, which was the reason for him telephoning Mr Burgess. He also denied the suggestion put to him that his memory of the conversation was affected by the knowledge proceedings might be brought against Austbrokers, should Icon fail in this proceeding. He further confirmed, in response to a question from me, that he had an independent recollection, at the time he first gave instructions in relation to that affidavit, of the numerals of Conditions 8 and 16 without being assisted by looking at the policy. 211 At J[169], the primary judge set out the important evidence as to why Mr O'Reilly in 2012 did not require a contracts commencing endorsement: 169. During the course of his cross-examination, I asked Mr O'Reilly for some assistance as to why, given his purported misunderstanding as to the operation of the policy wording and the clarification he sought from Mr Burgess, he did not seek to have the policy wording amended to reflect what he had been told. He answered as follows: I took it on face value of what he told me, and after reading condition 16 I then understood that was the intention of what we had with the contracts commencing. And going back a long way, it was often - whilst we always wanted contracts commencing, sometimes those policies would have options for both. And because Adam confirmed to me that condition 16 apply, I then knew condition 8 did not. (emphasis added). 212 One can see in this quoted evidence of Mr O'Reilly further evidence as to the market to add to Mr Bovington's evidence: that "sometimes those policies would have options for both": that is, both annual turnover, and contracts commencing. 213 At J[170], the primary judge referred to Mr O'Reilly's evidence as to the endorsements: As to the endorsements that Chase prepared and were sometimes provided to Austbrokers, Mr O'Reilly deposed that it never concerned him that the endorsements made no specific reference to the defects liability period of the projects. He said that this was because he understood, based on his discussions with Mr Burgess, that by notifying the relevant project and paying a premium based on the full contract value upfront, Icon was obtaining run off cover under Condition 16 of the 2012/13 policy which automatically applied during any defects liability period. 214 At J[171]-[172], the primary judge referred to further evidence as to Mr Burgess' intentions. Mr O'Reilly had provided a risk report for Icon's developer (the principal to the construction contract) prepared by another well-known broker (Aon) which contained a clear statement that Icon's liability cover included the following: Period of Insurance, includes full term of construction, including automatic extension to cover any overrun in anticipated construction period - YES If an 'Annual Floater' policy, period includes the full term of construction, including automatic 'run-off' period to cover the works until final completion (ie cover does not cease at the expiry date and is not at the discretion of the insured to exercise an option to obtain run-off cover). - YES. Mr Burgess did not demur from this at a meeting he had with Mr O'Reilly at which the document was the subject of consideration. 215 At J[173], the primary judge referred to Mr O'Reilly's evidence of a consistent understanding and how that consistent understanding was reflected in documents Austbrokers raised: Mr O'Reilly gave evidence that his understanding of the operation of the third party liability policies was entirely consistent from September 2012 to December 2018, which were evidenced by the project-specific certificates of insurance issued by Austbrokers to Icon, and the annual quotation slips it sent to Chase. Both of these sets of documents were in evidence. The project-specific certificates of insurance routinely stated that the period of insurance included the defects liability period, including in relation to the Project. As to the annual quotation slips, in each of those slips, under the heading "Liability", it was expressly stated that liability insurance was sought for indemnity against the legal liability of the insured caused by an occurrence "during the Construction Period and/or the Maintenance/Defects Liability Period happening anywhere in the world in connection with the Contract(s) or Works". It was also noted that the "Insured Operations" sought were those contracts or works relating to commercial building construction "commenced or declared within the Period of Insurance". Similarly, all the "Closing Instruction: Tax Invoices" that Austbrokers generated and sent to Chase to accompany payment of the third party liability premiums referred to the same Insured Operations "commenced and declared within the Period of Insurance". 216 Not all the documents and Mr O'Reilly's contemporaneous acts were entirely consistent on their face with this. At J[174]-[176] and J[179] the primary judge described the cross-examination and re-examination on this material: 174. In evidence were a number of emails sent by Mr O'Reilly to various people in relation to Icon's insurance programme, in relation to which he was taken in cross-examination. It suffices to refer to one. In respect of one of Icon's projects, Only Flemington, which was covered under the Liberty Policy, Mr O'Reilly had sent an email on 5 July 2017 to Mr Paul Vernall, a contract administrator at Icon. Relevantly for present purposes, that email stated: The contract works and liability insurance applies for the life of the construction, and the period of insurance seeks to address this by stating "the estimated completion date", and not an expiry date. The policy will remain in place until Practical Completion is achieved. The certificate can be amended to reflect any revision to the anticipated completion if this assists. 175. It was put to Mr O'Reilly that he was telling Mr Vernall in this email that the liability insurance applied for the life of the construction which is up to practical completion, to which Mr O'Reilly agreed. However, he had also answered that he "was talking to him about the completion date and practical completion. I wasn't referring to the completion of the policy in its entirety. I'm making no reference to the defects liability period." 176. In re-examination by counsel for Icon, Mr O'Reilly was asked generally about what he understood to be the "end date of cover" for the Icon projects that were declared and were the subject of the endorsements. In particular, he was asked why he regularly referenced and communicated by reference to a project's "practical completion date" in his correspondence. Mr O'Reilly gave evidence that, as the defects liability period never varied and was always 12 months for every single job: … the only variation was in relation to the construction period. So we sought to communicate in relation to the construction period. But there was no need to talk about the defects liability period. … And therefore the insurance responded to the full construction period as well as the defects liability period because the defects liability period was not a variable. … 179. Finally, in evidence were certain requests for extensions made by Austbrokers to Chase in respect of certain projects. The tenor of such emails was that Mr O'Reilly, at the relevant times, was advising Chase that "cover" for those specified projects was required to be extended due to overruns on the estimated completion dates. It was put to him that those requests were made because he knew that such extensions were required given the cover was only in effect until the practical completion date. Mr O'Reilly rejected that assertion, responding that he did not view the requests for extensions as a requirement given the "maximum construction period", and said that it was simply prudent to inform Chase as to where the project was at relative to the practical completion date. There was a series of documents in evidence, predominantly being renewal quotations sent by Chase for the annual policies, which showed that that maximum construction period was 36 months. Mr O'Reilly elaborated upon his reliance on the maximum construction period under re-examination. He said that so long as the request for an extension was within that maximum construction period, "Chase never said "No" to any extension or any notification for practical completion that we advised them". 217 At J[177], the primary judge referred to the evidence of Mr O'Reilly about the 2017/2018 Contracts Commencing Endorsement (see [34] above): … Mr O'Reilly said that endorsement was consistent with his intention and understanding throughout his dealings with Chase that the annual contract works and third party liability policies were contracts commencing policies, not turnover policies… 218 At J[177], the primary judge then discussed Mr O'Reilly's evidence of discussing the endorsement with Mr Aldridge of Chase at J[177]-[178]: 177. … Soon after I received the policy wording containing [the Contracts Commencing Endorsement], I called James Aldridge of Chase and asked him why [it] had been included. He said words to the effect of "Sorry, it was always meant to be there. It just confirms the way the cover has always been placed." I said words to the effect of "fine". 178. Mr O'Reilly confirmed that he understood that Mr Aldridge joined Chase in about mid-2017. In cross-examination, he accepted that he was aware that Mr Aldridge had therefore not been involved in the renewal of any Liberty policy, and he further accepted that he had no basis for assuming what Mr Aldridge knew or did not know about past Liberty annual policies.

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The evidence concerning Chase 219 Mr Burgess did not give evidence. We will come in due course to the primary judge's use of Jones v Dunkel [1959] HCA 8; 101 CLR 298 in respect of the failure of Liberty to call Mr Burgess. 220 The primary judge referred, at J[181]-[187] to seven pieces of the most significant evidence (one way or another) about Chase's intention. 221 The first was the conversation between Mr Burgess and Mr O'Reilly in September 2012 (see [84] above). 222 The second was the conversation between Mr Aldridge and Mr O'Reilly, above. 223 The third was the evidence of endorsements and various emails to Austbrokers in which there is no mention of the defects liability period, especially the email of Mr Bortone of 9 December 2015 in respect of the Opal Tower Contract cover (see [104] above). 224 The fourth was the conversation between Mr Burgess and Mr Hingston which Mr Hingston identified as occurring in September 2013, dealt with by the primary judge at J[140]-[141] (see [199]-[200] above). 225 The fifth was an email of 17 May 2017 from Mr Vernon of Chase to two claims associates at Liberty copied to Mr Aldridge of Chase about a flood damage claim for Icon in relation to the 2016/2017 policy in which the policy is described as a Contracts Commencing Policy. 226 The sixth was Mr Hingston's evidence in cross-examination about Chase's intention. In an email of 22 February 2019 (after the Opal Tower Occurrence) from a senior claims handler, Mr Tucker, at Liberty the following appears: Chase has verbally indicated to Liberty that it holds a [sic: an] opinion different to that of Liberty, with respect to the interpretation of the policy documentation. This was based, Mr Hingston said, on what Mr Burgess was saying: that the policy responded to the incident. 227 The seventh was the evidence of Mr Bovington, as the primary judge said at J[187]: "that contracts commencing policies provided cover for the project until works are completed plus the relevant defects liability period."

[33]

The evidence as to Mr Hingston's intentions 228 At J[188]-[203], the primary judge examined the evidence concerning Mr Hingston, who was a senior underwriter and the key decision-maker for Liberty and the person with primary responsibility for Icon's insurance with Liberty. 229 Mr Hingston expressed agreement with certain background contextual matters as set out by the primary judge at J[189]: Like Mr Bovington and Mr O'Reilly, Mr Hingston agreed that it was common knowledge among insurance brokers and underwriters in the construction industry that commercial building projects had a construction period and a defects liability period, and that builders are required to maintain third party liability insurance during the defects liability period. He agreed that he understood, between 2012 and 2015, that it was usual for contracts commencing policies to provide cover for the construction period and the defects liability period. Mr Hingston further agreed that he knew that the premium that Icon paid for each of the contracts declared and endorsed into the policy was calculated based on the value of the whole project including the defects liability period. However, Mr Hingston denied that Liberty had agreed to cover the risk for whole projects declared, including the defects liability period. 230 Mr Hingston gave evidence that Liberty developed a standard contracts commencing policy wording from 2015. 231 Mr Hingston deposed to the conversation with Mr Burgess (in, he said, 2013) as follows: 1. Icon didn't want to pay for their annual policy up front anymore because they don't want to commit to a particular estimate of turnover as they did not know which tenders they would win and wanted to mitigate their costs; 2. Icon wanted to pay a deposit premium of $50 million to start the annual policy off, and then would declare the turnover anticipated from each project as each was secured and it would be declared into the annual program; and 3. As Icon would be paying for the turnover of each project up front, that project would be covered under the annual policy then in place. 232 At J[192]-[194], the primary judge summarised the cross-examination as to this conversation (which we have set out at [202] above) and how it was implemented: 192. In cross-examination, Mr Hingston agreed that the effect of this request was that the relevant projects, being projects for which an additional premium was paid, would be covered under the annual policy then in place for the period of those projects. Mr Hingston agreed that there was no discussion in that conversation of the period of cover not including the defects liability period for the relevant projects. Mr Hingston confirmed that he had agreed to the changes that Mr Burgess requested, and then left it to Mr Burgess to confirm the nature of those changes with Austbrokers, and did not seek to clarify the nature of those changes directly with Icon or Austbrokers. 193. Despite the references to turnover in the passages of Mr Hingston's evidence above, Mr Hingston agreed that what he meant by turnover was "project value". In his affidavit, Mr Hingston deposed that the value of contracts commenced by an insured is "essentially the same as the turnover of an insured, except that it is turnover which is earned over an extended period". He maintained in cross-examination that what Mr Burgess was suggesting was not different to the scheme of cover set out in the policy wording. Instead, he suggested that by virtue of the way in which the premium was calculated under the amended arrangements, the "project value and the turnover is interchangeable". He said that under that arrangement, "turnover" is simply earned over an extended period. He therefore maintained the position that the Liberty Policy operated as a turnover policy, despite the fact that he agreed that under the policy wording, "turnover" is only calculated on the basis of that portion of the work that an insured completes on a project that happens during any 12-month period. 194. On that basis, it was put to Mr Hingston that the way that the Liberty Policy then operated, post the change effected pursuant to his discussions with Mr Burgess, was not as a turnover policy, but instead as a contracts commencing policy. Counsel for Icon put to him three features that were "entirely consistent" with the Liberty Policy being a contracts commencing policy: first, was the fact that Icon estimated the value of contracts to be commenced rather than annual turnover; secondly, was that Icon paid a premium for each project determined by applying an adjustment rate to the total project value; and thirdly, was that cover extended beyond the term of the annual policy for the projects declared. Mr Hingston assented to each of those propositions, but nevertheless denied that these features were inconsistent with the Liberty Policy being an annual turnover policy. Instead, he gave evidence that the policy did not specifically give an extended period for defects liability, and it did not specify that it was a contracts commencing policy. That is, despite having agreed that the Liberty Policy, as operational, had these three characteristics of a contracts commencing policy, he denied that this meant that it was, in fact, a contracts commencing policy. 233 At this point, Mr Hingston was directed to condition 15. The primary judge dealt with his evidence in this regard at J[195]-[196]: 195. Further, in respect of the operation of Condition 15, Mr Hingston agreed that he understood at all relevant times from 2012 onwards that, provided Icon gave appropriate written instructions and paid the required additional premium, the policy would continue in full force and effect for the specified contracts until completion, including the defects liability period. He further accepted that if Icon satisfied those requirements, Icon would have that extended cover whether or not Liberty wanted to grant it. He accepted that Icon regularly declared its contracts that would be incomplete at expiry and the value of works under those contracts, and regularly paid a premium to obtain cover for such projects calculated by applying the adjustment rate to the value of the works declared. However, he denied that this meant that Icon was obtaining run off cover under the terms of the annual policy. 196. In his evidence in chief, Mr Hingston deposed that requests for run off cover are usually made where an insured is about to stop renewing their annual policy of insurance (either because it is winding up its business operations or because they are undertaking a wholesale change in the manner in which they secure cover moving forward). He deposed that he "would have been surprised to have received a request for "run off" cover for any project at the commencement of works for that project, where the ultimate cost of that project and the period of insurance allowing for any delays (i.e. weather) is unknown." However, when pressed in cross-examination, Mr Hingston accepted that Condition 15 did not require the ultimate cost of the project to be declared prior to expiry of the annual policy period, nor did it require the insured to estimate the period of insurance allowing for any delays such as weather. 234 Mr Hingston was also taken to the Austbrokers' quotation in 2012 and 2015 which he read and signed and which contained the references to defects liability period under the heading "Liability": see [74]-[75] and [98]-[99] above. The primary judge at J[198]-[199] dealt with cross-examination on these quotations: 198. Mr Hingston agreed in cross-examination that he did not query those documents or inform Chase, Austbrokers or Icon that Liberty would not provide cover on that basis, despite noting that that request "wasn't consistent with our wording". In answer to a question from me as to why, notwithstanding that purported inconsistency, he did not think to advise any of the relevant counterparties about it, he said: We're working under the advice of the wholesale broker that was - you know, in - in conjunction with the other discussions we were having on the type of programme and deal they were looking to put together for Icon and Austbrokers at the time. 199. He denied, when it was put to him, that the real reason he did not query the reference in the quotation slip to cover being provided for the defects liability period was because he knew that the policies were supposed to operate on a contracts commencing basis. 235 At J[200]-[203] the primary judge dealt with some important emails in 2018 involving Mr Hingston. They were sent in late 2018, but before the incident on Christmas Eve at the Opal Tower. On 19 November 2018 Mr Hingston sent the following to Mr Vernon of Chase (the emphasis being in the primary judge's reasons): Hi Nick, Trust you've been keeping well. I refer to policies placed from the 2012-2016 periods for Icon Constructions. We have a couple of claims on the go for Icon where we need to be certain of the period these claims should fall into. I'm sure from memory the policy was supposed to be on a contracts commenced basis, but the Chase placing slip and wording does not specify contracts commenced in the either the placing slip or policy schedule. For instance, we have a claim on the Buranda project where the loss occurred on 18 December 2017 which is past final expiry date, but we have been advised this should be in the 15-16 period as this is when the project was declared to [Liberty]. Given the wording and placing slip does not specify that this is a contracts commencing cover, would you please forward through retail broker's quote slip or placing slip to Chase that confirm their intention was in fact to place cover on a contracts commenced basis. Please don't hesitate to contact me should you wish to discuss. Regards, Dan 236 On 7 December 2018, Mr Higginson from Chase responded: I understand the confusion on this account. For the 2012-2013 period we wrote this account on a very traditional basis, whereby the Insured declared their full estimated turnover (on a turnover basis and not Contracts Commencing). From 2013-2016, the placement was changed to a structure whereby the Insured paid a deposit premium to account for the Products Liability exposure and incidental business exposures. The annual in place was still on a turnover basis (not Contracts Commencing). There was a pre-agreed rate to apply per project, which were to be declared before coverage was offered. When declared, each project was added to the annual programme for the entire construction period and the premium was charged based on the full contract value. If you can tell me the specific projects in questions, I can forward you more precise placement information which may assist you explain this to your claims guys. 237 On 14 December 2018, Mr Hingston sent the following to Mr Tucker at Liberty (again, the emphasis being in the primary judge's reasons): Hi James Refer response received below. It seems they think the policy is based on turnover during the period with contracts being declared, but if they are attaching separate policies when they come on for the entire period then effectively it is contracts commenced. They could have an issue whereby we could say that despite the period noted in each endorsement we could rely on the actual policy period. I will go back to Rob on this, I think they have lost their way little. Regards, Dan 238 Mr Hingston's evidence was discussed by the primary judge at J[203] of the reasons: Mr Hingston set out these emails in his affidavit, and was cross-examined in relation to them. In his evidence in chief, he deposed that at the time of the first email he sent to Mr Vernon he had no reason to revisit the Icon account "in any significant way" in over 12 months, and had not looked back through his file or emails. He characterised the words used in his email to Mr Vernon, in respect of his recollection that the Liberty Policy was to operate on a "contracts commencing" basis, as "loose language". Finally, he gave evidence that, having subsequently reviewed his file prior to swearing his affidavit, he believed that Mr Higginson's explanation of the way the Liberty Policy was to operate was accurate. In cross-examination, he said that the statement he "was sure from memory the policy was supposed to be on a contracts commenced basis", was incorrect. In effect, he gave evidence that "sure from memory" actually meant "unsure from memory" at the time he wrote that email. Mr Hingston denied, when it was put to him, that, aided by the review of numerous documents in preparation of his affidavit, including a number of contemporaneous emails to which he was not a party, and a conferral with his solicitors, he had attempted to create the impression that the Icon policies between 2012 and 2016 were turnover policies, when that is not what he understood them to be at the time.

[34]

Findings and conclusions as to a common intention 239 The primary judge began by emphasising (correctly) at J[204] that it was the common intention at the time of the entry into the relevant policy in September 2015 that was in issue. His Honour also recognised that in the usual course of resolving contested factual issues in commercial cases contemporaneous documents written in the ordinary course of business are of great importance. Whether that helpful working hypothesis should be enshrined in any rule or general practice of placing little reliance on recollections of conversations as expressed by Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [22] cited by the primary judge at J[205] need not detain us. Importantly, the primary judge recognised that in this case, where the relevant enquiry was over a period of six years (2012 to 2018) and the contemporaneous documents were numerous, and often minor in their contemporary importance, it can be expected that there will be some potential variability in the effect of the documents. In such circumstances, the primary judge considered (correctly) at J[206] that "the content of oral communications assume central importance in ascertaining the true position, thus requiring close attention to be given to the accounts of the two principal witnesses, Mr O'Reilly and Mr Hingston."

[35]

Mr O'Reilly 240 In execution of that task, the primary judge carefully and at length (J[207]-[228]) examined the evidence of Mr O'Reilly. We will deal with it a little more in considering Liberty's grounds of appeal, but for present purposes the following will suffice. 241 Mr O'Reilly was "an impressive witness", honest and careful in giving evidence, who made appropriate concessions but was otherwise responsive with an apparent clear recollection. 242 The submissions of Liberty to the primary judge were that Mr O'Reilly was confused and his evidence unreliable to form the foundation of a clear intention. 243 Critically the primary judge accepted Mr O'Reilly's evidence as to the conversations with Mr Burgess and as to why he did not seek a variation to the wording, saying at J[220]: I believe Mr O'Reilly's evidence as to both the conversations between him and Mr Burgess and also his evidence concerning the preparation of his affidavit, and to my mind, this latter evidence supports a finding that he had a clear recollection of the relevant conditions. I also accept Mr O'Reilly was genuine in his answers as to why he did not write a more contemporaneous note of the conversation, and his evidence (at [169]) as to why he did not entreat Chase to amend the policy wordings. Moreover, no contrary account of the relevant conversation was put to Mr O'Reilly, nor was it put to him that his evidence of the conversation was false. In circumstances where, as I will detail below, I have found that Liberty knew the nature of what Mr Burgess' evidence would have been had he been called, this forensic decision to challenge Mr O'Reilly by highly experienced counsel is of significance: see Chong v CC Containers Pty Ltd [2015] VSCA 137; (2015) 49 VR 402 (at 461-2 [202]-[203] per Redlich, Santamaria and Kyrou JJA), quoting R v MAP [2006] QCA 220 (at [57] per Keane JA). 244 Importantly, the evidence referred to at J[169] (see [211] above) was accepted: His Honour accepted what Mr Burgess said that condition 16 (later 15) could be used to effect contracts commencing cover which Mr O'Reilly had said Icon wanted. 245 The primary judge then examined the documents that were raised in the exchanges between the parties. At J[222], the primary judge summarised and rejected the primary attack on Mr O'Reilly as confused: In this respect, much was also made by Liberty of the invoices of Austbrokers sent to Icon and its closing instructions to Chase in support of the submission that Mr O'Reilly's understanding of the two policies was confused. It may be accepted that Austbrokers' inclusion of the details of the MDCW policy in those documents is curious, but I do not think that fact bears the consequence that Liberty submits. Both the MDCW policy and the Liberty Policy were provided to Icon in tandem, quoted and invoiced together by Chase. There is no doubt Mr O'Reilly viewed it as essentially one programme. This explains Mr O'Reilly's evidence that his email to Mr Burgess of 19 September 2012 (see [164] and [219]) was referring to his intention that the third party liability policy was to be a contracts commencing policy, notwithstanding that the email can be read as referring to both policies. Accepting, as I do, that Mr Burgess identified to Mr O'Reilly that the liability policy operated as a contracts commencing policy through the mechanism of Condition 15, it is understandable that Mr O'Reilly proceeded on the basis of treating the elements of each policy somewhat interchangeably. It was not, of course, good practice to provide the client with elements of the MDCW policy in a quotation with respect to the liability policy, but this does not negate the fact that the reason for Mr O'Reilly doing so was his understanding that the policies were in effect "exactly the same" in the relevant respect. 246 Central to the appeal is the clear acceptance by the primary judge that notwithstanding the terms of some documents over a long period, Mr Burgess told Mr O'Reilly, who accepted what he said, that condition 15 could make the policy operate as a contracts commencing policy on terms there set out. His Honour believed that Mr O'Reilly had the intention, shared with Mr Burgess, that contracts commencing cover could be provided by the invocation of condition 15. At J[224]-[226], the primary judge set out the consequences of the clarity of the meeting of minds of Mr O'Reilly and Mr Burgess: 224. This presents an answer to Liberty's submission concerning Mr O'Reilly's confusion. So long as the parties held a common intention as to the legal effect of the document that was inconsistent with its true effect, it matters not that the parties misinterpreted its legal operation. It is that common misinterpretation, contrary to the true agreement, which grounds the equity. 225. I further accept that, provided with the endorsements and email confirmations as to cover sent by Chase, Mr O'Reilly was not concerned that those communications did not refer to the defects liability period because he believed that the effect of the Liberty Policy was that that period was always covered. This belief accords not only with the commercial realties but with his further evidence, which I accept, that the reason for his reference in the emails to Icon to the Liberty Policy remaining in place "until Practical Completion is achieved", and for Austbrokers' requests for extensions on certain projects when a practical completion date was looming, was that he believed it was not necessary to refer to the defects liability period; the practical completion date was the only relevant variable. The evidence further establishes that those extension requests were a reflection of Mr O'Reilly's cognisance of the maximum construction period, which was 36 months for any one project. 226. The evidence further establishes that Mr O'Reilly's intention was formed immediately prior to Icon's entry into the policy with Liberty in September 2012, and continued throughout the course of the party's dealings, including up to and inclusive of the entry into the Liberty Policy. I accept Mr O'Reilly's evidence that the Aon report (see [171]) reinforced his belief and intention in the operation of the Liberty Policy. Further, Austbrokers' project-specific certificates of insurance, issued to Icon, its annual quotations slips and its project-specific email declarations, sent to Chase, which all refer to the 12 month defects liability period, are compelling evidence that Mr O'Reilly's continued intention was that the policy was to operate as a contract commencing policy. 247 Further, as pointed out by the primary judge at J[227], Liberty did not directly challenge Mr O'Reilly on his evidence that he subjectively believed that he was obtaining cover inclusive of the defects liability period; by the invocation of condition 15, contract by contract, relevantly by giving instructions in respect of the Opal Tower Contract.

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Chase 248 The primary judge found (at J[236]) that Chase held the Contracts Commencing Intention, after a careful examination and weighing of the evidence at J[230]-[235]. 249 At J[230], the primary judge commenced with the dispute as to when Mr Burgess had the conversation with Mr Hingston as to the change in the way the policy was to operate. The primary judge was clear in his acceptance of Mr O'Reilly's evidence that he spoke with Mr Burgess about the desire for contracts commencing cover at the outset, in September 2012. It is to be recalled that the not inconsiderable premium for the 2012/2013 policy was based on the total value (turnover) of the Tip Top and Green Square projects ($234,800,000): see [84]-[91] above, and see especially para 44 of Mr O'Reilly's evidence at [84] above and [91] above as to the premium. That said, there was a change in 2013 to a deposit premium based on $50 million. That change, it can be accepted, was not discussed with Mr Hingston prior to renewal in 2013. The primary judge did not consider the timing of the conversation between the Burgess and Mr Hingston as crucial, saying at J[230]: I accept Mr Hingston's unchallenged evidence that the conversation between him and Mr Burgess occurred in relation to Icon's request to change the way the policy operated. However, the evidence does not enable me to make any definitive finding as to whether that conversation occurred in 2012, as Icon would have it, or 2013, as Liberty contends. Although, in the end, for the purposes of the Rectification Claim the date itself is of no moment, should it have occurred in 2012, the timing would have married neatly with the conversations Mr O'Reilly had with Mr Burgess. This would have more readily enabled me to find that the Mr Burgess' conversation with Mr Hingston supported Chase having held the Contracts Commencing Intention. Notwithstanding this ambiguity as to timing, in view of the fact that I have found that Mr Burgess said what he did to Mr O'Reilly, the conversation he had with Mr Hingston takes on a somewhat different complexion than the way in which Mr Hingston attested. As I have found, Chase had authority to provide contracts commencing cover. Mr Hingston accepted that in their conversation, neither he nor Mr Burgess discussed that the period of cover sought by Icon was limited to the construction period, or that the period of cover did not include the defects liability period for the relevant projects. Further, Mr Hingston had delegated to Mr Burgess the task of "working out the details" of the new arrangement with Icon, in circumstances where he knew that Chase had been discussing those changes with Austbrokers. I am persuaded that the evidence in relation to this conversation, in combination with my findings in relation to Mr Burgess' conversation with Mr O'Reilly, weighs toward a finding that Chase held the Contracts Commencing Intention. 250 The primary judge also gave weight to the email of 17 May 2017: see [225] above. 251 In J[232], the primary judge dealt with the endorsements and email confirmations of cover sent by Chase to Austbrokers, as follows: The endorsements and email confirmations of cover sent by Chase to Austbrokers were relied upon by Liberty as convincing evidence that is inconsistent with the claimed common intention. As will be recalled, the email confirmation Mr Bortone sent to Mr O'Reilly on 9 December 2015 stated in relation to the Project that "cover is in place from 16 November 2015 and ending 10 August 2018", being up to the estimated practical completion of the Project. Given this, it was said that no intention of the Liberty Policy being on a contracts commencing basis can be established such that the Project declared was covered throughout the defects liability period. The same submission was made in respect of the "estimated project period" listed on the Opal Tower Endorsement, signed by Liberty. During cross-examination, Mr Hingston said the "estimated project period" in that and all other endorsements meant "period of insurance", and that those terms were, in effect, interchangeable. However, Mr Hingston gave evidence that "I guess it was an error on my part" that he didn't change the wording of estimated project period to read period of insurance. I do not accept this evidence. For similar reasons (which I will detail more fully below in relation to my findings in relation to Mr Hingston's intention), Liberty can point to no communication from it to Chase, or from Chase to Austbrokers, expressly denying that the cover provided did not include the defects liability period. This is particularly telling when it is borne in mind that all of Austbrokers' quotations slips and project notifications refer to cover being sought during the defects liability period. The more likely reason for the omission, on the evidence before me, is that the "estimated project period" as referenced in the endorsements was intended by Chase, and Liberty, to refer to an estimated end period for the construction of the relevant project. As Mr O'Reilly attested, and I have accepted, the communications between the parties referred to that period as it was the end date which was subject to variation at any time, subject to it remaining within the 36 months maximum construction period. 252 At J[233], the primary judge placed no real weight on what Mr Aldridge said ([218] above) because of lack of proof of his familiarity with the file. 253 At J[234], the primary judge noted that Mr Hingston's evidence was that both Mr Burgess and Mr Vernon expressed the view that the policy covered the incident pursuant to condition 15. The primary judge described Mr Tucker's email (see [226] above) as "in effect an attempt [by Liberty] to pull them [Chase] into line". 254 The primary judge placed little weight on the content of the email of Mr Higginson of Chase of 7 December 2018 (at [236] above), saying at J[235]: Finally, I place little weight on the statement made by Mr Higginson of Chase, in his email to Mr Hingston on 7 December 2018 (set out at [201]) in which he stated that the policies between Icon and Liberty were to operate on a turnover basis, not a contracts commencing basis. As can be seen from the foregoing, this statement is inconsistent with the weight of the evidence going to Chase's intention. Further, similar to the position in relation to Mr Aldridge's evidence, there was insufficient information in evidence for me to assess the precise nature of Mr Higginson's role at Chase; he was not a key player, and as a character in this dispute his name appeared quite infrequently. Although that email initially caused me some pause, I find that it is not of significance in forming a conclusion as to Chase's intention in the light of the volume and weight of the other relevant evidence considered above.

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Mr Hingston 255 The primary judge's overall impression of Mr Hingston was set out at J[238], as follows: Mr Hingston came across as a confident and intelligent corporate professional, and by and large was unphased at being in the witness box. His evidence was carefully crafted and although his answers in cross-examination were generally direct and carefully thought through, when faced with inconsistencies in his own evidence, he did not readily make concessions, and, as I will detail further below, at critical points I found that his evidence appeared to be fashioned to suit the perceived forensic exigencies of the moment. 256 At J[239], the primary judge commented upon the preparation of his evidence, as follows: In relation to the preparation of his affidavit, Mr Hingston gave evidence he read through certain documents that had been produced to his solicitors in the course of the proceeding, including documents that had been prepared and sent between other people to which he was not a party. He accepted that such documents included those pertaining to Mr O'Reilly's version of "how he felt the policy should respond". However, he denied that he could recall that he had had regard to any email correspondence of that nature between Chase and Mr O'Reilly at the time of swearing his affidavit. 257 The primary judge said the following at J[241]-[244]: 241. I have found Mr Hingston's accounts of his intention at the relevant times to be artful but unpersuasive. I now turn to the specific aspects of, and make findings in relation to, that evidence. 242. A recurring theme which was of concern to me was Mr Hingston's attempts, in several respects, to repurpose the meaning of certain words used in various documentation to suit Liberty's case. Two examples illustrate the point. 243. First is the evidence he gave in relation to his equation of the words "period of insurance" with "estimated project period" in the Opal Endorsement, discussed above. As I have outlined, Mr Hingston noted that "it must have been an error" on his part to have not amended those words. I do not accept that this was his understanding of the term. As a highly experienced professional in the insurance industry, it strikes me as odd that Mr Hingston would have overlooked that the cover Liberty was providing would be left referred to in a way which did not reflect a critical component of that cover, being its end date. 244. Secondly, a perhaps more telling illustration was the reference in his affidavit to the conversation with Mr Burgess concerning Icon's request to change the manner in which the policy operated. His account of that conversation as deposed to in that affidavit referred to Icon's request to declare its "turnover" and pay for that "turnover" up front. When pressed during cross-examination, Mr Hingston accepted that he actually meant "project value". In circumstances where he accepted in cross-examination that he knew what the elements of turnover and contracts commencing policies were, I cannot accept his explanation that contracts commencing is "essentially the same as … turnover", nor that those terms are therefore "interchangeable". Indeed, as the cross-examination brought to light, Mr Hingston grudgingly accepted that the elements of how the policy operated bore the hallmarks of a contracts commencing policy, notwithstanding his refusal to accept that is in fact how the policy operated. 258 Of equal difficulty was the matter dealt with by the primary judge at J[245] of the reasons: If contracts commencing cover was not being provided, why was there no communication that it would not be? At J[245] the primary judge said: Another claimed infelicity was his failure to have communicated to Icon, through Chase, that the cover sought in its placing slips was not cover that Liberty was prepared to offer. His explanation that "we're working under the advice of the wholesale broker", being Chase, was altogether unpersuasive in this respect. Each year Icon provided Liberty with those quotation slips. Every one of those slips referred to cover being sought during the defects liability period. He confirmed that he had read those slips - indeed in respect of the 2012/2013 policy, the copy in evidence was signed by him. Based on his claimed intention, he accepted in response to a question from me that what was being sought by Icon was inconsistent with what Liberty were offering. But he did nothing about it. I do not accept Mr Hingston's explanation. 259 The primary judge then dealt with the 2018 emails in which Mr Hingston, himself, had called the Icon policy "contracts commenced" cover. At J[246] the primary judge rejected Mr Hingston's attempt to explain away the emails, saying: … I reject Mr Hingston's somewhat laboured attempt to explain away these emails. The purported "looseness" of language was far from that. Mr Hingston's reference to not having recently reviewed the Icon file "in any significant way", and his subsequent review of relevant documents does not dissuade me from this view. As I noted in Webb v GetSwift Limited (No 5) (at [18]) such refreshment of memory is not always that - the assistance Mr Hingston has gained from his thorough "review" included documents not in his possession at the time of the events in question. 260 At J[248]-[249], the primary judge concluded as follows: 248. Having considered Mr Hingston's evidence in the context of all the other evidence including the contemporaneous documentation, I am comfortably satisfied that Mr Hingston was prepared to offer cover to Icon on the basis that the defects liability period would be covered. 249. I therefore find that in addition to Chase, Mr Hingston held, at the relevant times, the Contracts Commencing Intention. I make these findings having had regard to s 140(2) of the Evidence Act and the repeated cautions in the authorities as to the need for clear and convincing proof in a rectification suit.

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Jones v Dunkel and Mr Burgess 261 At J[250]-[265], the primary judge dealt with the question of the application of Jones v Dunkel to allow the inference that Mr Burgess' evidence would not have assisted Liberty's case. We will deal with this matter in discussing the submissions on the appeal.

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Whether the "Contracts Commencing Intention" was relevantly communicated between the parties 262 The issue was, as the primary judge said at J[266]-[267], not whether it was expressly stated, but whether the parties knew of each other's intention such that there can be said to be a common intention, relying on what was said by Campbell JA in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 at 660 [281] and by Gageler, Nettle and Gordon JJ in Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 260 CLR 85 at 117 [104]. 263 The primary judge answered this in the affirmative at J[268]-[270]: 268. In some respects it is unnecessary for me to consider the communication issue further in the light of the finding I have made concerning Chase's intention and Mr O'Reilly and Mr Burgess' conversation. Nevertheless, as is apparent, that conversation occurred upon the entry into the 2012/13 policy, and, although I have also made my findings in relation to the nature of Mr Burgess' conversation with Mr Hingston, that latter conversation may have also occurred at that time, or around the time of the 2013/14 policy. Accordingly, there is insufficient evidence of any "express statement" of that intention at the time of the parties entering into the Liberty Policy. 269. However, the implication of the passage set out above is clear in this case. As was common ground, the evidence of Mr Bovington establishes that the parties knew the nature of contracts commencing policies at the relevant time. They knew their elements and knew that the way in which they were conducting themselves was consistent with such policies. Accordingly, their disclosure of those intentions can also be inferred by their mutual understanding that the business practices concerning contracts commencing polices in the insurance industry would apply, in circumstances where there is no evidence that anything was said between the parties about those practices not applying. 270. In such circumstances, in addition to the conversation between Mr O'Reilly and Mr Burgess, the parties knew enough of each other's intentions for it to be said that they commonly held the Contracts Commencing Intention.

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Whether Annexure A Endorsement reflected the common intention 264 The primary judge recognised that it was necessary to be able to formulate in words that embodied the true common intention, especially where, as here, the mistake was not as to the words but as to the effect of the words. Importantly in this respect, the primary judge said at J[273] that there is no requirement that the parties had a common intention as to the precise form of words that the parties intended to use. Rather it is for the Court to determine with appropriate clarity the substance and detail of the variation. 265 At J[275]-[277] the primary judge dealt with and rejected Liberty's objections to the proposed endorsement said to embody the equity of rectification, as follows: 275. Liberty contended that the Annexure "A" Endorsement does not achieve contracts commencing cover, in the way that cover is defined by Mr Bovington in his evidence. It further contends that the insuring clause is entirely replaced such that the cover under the policy is significantly limited from the cover of the policy as issued. It further says that there is no evidence that the text had been seen by Austbrokers in any form prior to late 2017. 276. I do not accept these submissions. In respect of the final submission, in the light of the above authorities, the fact that Austbrokers' had not seen that endorsement until 2017 is of no moment. As to the insuring clause, Mr O'Reilly's evidence was that it was always the intent that the "Product Liability and Completed Operations" cover in the annual Liberty policies responded to liabilities "post practical completion", and the amendments introduced by the Contract Commencing Endorsement did not represent any substantive change in the Liberty Policy. Mr Hingston agreed (at T346.9-11) that he understood that the annual policies that Liberty provided to Icon between 2012 and 2016 provided cover for Products Liability and Completed Operations. He confirmed that there was no inconsistency in a contracts commencing policy also providing cover for products on hand or operations that were completed prior to the commencement of the annual period. On these bases, I am satisfied that the change to the insuring clause is appropriate and reflects the parties' common intention. 277. As to the other changes, I have been assisted by the preparation by Icon of a table setting out the relevant changes and references in the evidence to where the intention of the parties corresponds with those changes. The table was not the subject of any substantive challenge by Liberty, and for the reasons submitted by Icon in that table, I accept that the form of the suggested change reflects the parties' common intention. That table is set out at Annexure A to these reasons.

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The notice of appeal 266 There were 11 grounds of appeal. They were helpfully collected and addressed in submissions in the following order: A. The "Contracts Commencing Intention": grounds 3-6 B. Whose intention?: grounds 1 and 2 C. Error regarding Hingston's evidence: ground 7 D. Error in equating "run off cover" with "Contracts Commencing Intention": ground 8 E. Misapplication of Jones v Dunkel: grounds 9 and 10 F. Error regarding Annexure "A" Endorsement: ground 11 267 We will deal with the appeal in the same order. In order that these submissions be coherent, given the precision and detail of the submissions, we will deal by way of commentary with certain matters as they arise in discussing the submissions, before expressing our final conclusions later.

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A: Grounds 3-6 and the appellant's submissions 268 Grounds 3-6 were in the following terms: 3. Having concluded that: a. the requisite common intention must be established by evidence in the "clearest and most satisfactory manner" ([114]); b. the provisions of s 140 of the Evidence Act 1995 are applicable to assessing the relevant evidence ([116]); c. what usually matters most in contested factual matters is the "proper construction of such contemporaneous notes and documents as may exist" ([205]), the learned trial judge erred in finding that: d. Mr O'Reilly held the "Contracts Commencing Intention" in September 2012 and at all times up to entry into the Liberty Policy ([226]-[228]); e. Chase held the "Contracts Commencing Intention" in September 2012 and at all times up to entry into the Liberty Policy, and that such intention was to be attributed to Liberty ([236]); f. Mr Hingston, on behalf of Liberty, held the "Contracts Commencing Intention" in September 2012 and at all times up to entry into the Liberty Policy ([249]). 4. Further to paragraph 3 above, and without limiting its scope or content, the learned trial judge erred in making the findings referred to therein because: a. the contemporaneous notes and documents in evidence, including those that the learned trial judge failed to consider, were inconsistent with the intention(s) found and, instead, justified findings that no such intention(s) was held; b. the learned trial judge failed to consider, or accord appropriate weight to, the inconsistencies between the different versions provided by Mr O'Reilly of his conversation with Mr Burgess in September 2012 and to assess those versions in light of contemporaneous documents, including the proposed liability policy and the proposed material damage/contracts work policy; c. the learned trial judge failed to consider the competing and conflicting quotations for a liability policy provided by each of Austbrokers Countrywide (Austbrokers) (on behalf of Icon) and Chase (on behalf of Liberty) in each of 2012 and 2015 and thus failed to find that they reflected opposing intentions as to the content of the liability policy that Liberty was prepared to enter into; d. the learned trial judge failed to consider, in respect of the intentions of each of Mr Burgess and Mr Hingston, the placing slips provided by Chase to Liberty that were inconsistent with the holding by either of them of the "Contracts Commencing Intention"; e. the learned trial judge erroneously construed the document referred to at [185] and [231] by failing to have regard to the text of the document that was inconsistent with the "Contracts Commencing Intention"; f. the learned trial judge erroneously equated, at [186], evidence of an opinion held by Mr Burgess about the proper construction of the run-off provision in the Liberty Policy and the holding of the "Contracts Commencing Intention"; g. in assessing the evidence Mr Hingston referred to at [192] and [230], the learned trial judge - i. failed to understand that, on the operation of the Liberty Policy in accordance with its written terms, cover would be available for liability in respect of property damage happening during the defects liability period of a project if it was also during the stated period of insurance, and thus no basis arose for specific reference to be made to the defects liability period in any project; ii. appeared to conclude that it was necessary for Mr Hingston/Liberty to disprove that it held the "Contracts Commencing Intention" h. the learned trial judge misquoted, alternatively misconstrued, the text of the email referred to in [219] and, having done so, erroneously construed it as supporting one version of the conversation as described in evidence by Mr O'Reilly; i. in assessing what he described as "particularly telling" evidence, in [232], the learned trial judge failed to understand that, on the operation of the Liberty Policy in accordance with its written terms, cover would be available for liability in respect of property damage happening during the defects liability period of a project if it was also during the stated period of insurance, and thus no basis arose for specific reference to be made in any communication between Liberty and Chase or between Chase and Austbrokers expressly denying that cover did not exist during the defects liability period of any project. 5. Further to paragraphs 3 and 4 above, the learned trial judge erred in making the further finding ([266]-[270]) that the "Contracts Commencing Intention" was communicated between Icon/Austbrokers and Chase/Liberty. 6. The learned trial judge ought to have found that: a. neither Liberty nor Icon ever held the "Contracts Commencing Intention", alternatively the "Contracts Commencing Intention" was not held by them in common; b. the contemporaneous conduct of the parties (including Austbrokers and Chase) was inconsistent with either or both of them holding the "Contracts Commencing Intention"; c. the evidence failed to meet the threshold necessary to support the equitable relief sought; d. further or alternatively, the "Contracts Commencing Intention" was never communicated between Icon/Austbrokers and Chase/Liberty; e. the repeated references in evidence to "contracts commencing policies" was no more than an unhelpful label, often used inconsistently with the fundamental features of "contracts commencing policies" as explained by the expert witness, Mr Bovington, and inconsistent with aspects of the "Contracts Commencing Intention" as found. 269 Liberty submitted that the appropriate approach to appellate review as to the questions of the holding by Mr O'Reilly and Mr Hingston of the Contracts Commencing Intention was based on a real rehearing and an examination of all the documents. It was stressed that there must be an exactitude of proof present: clear and convincing proof. So much can be accepted. 270 The need for exactitude of proof was not lost on the primary judge, his Honour saying the following at J[114]-[118]: 114. As to the establishment of that common intention, the evidence necessary to discharge the onus needs to be convincing. In the leading judgment of Fowler v Fowler (1859) 4 De G & J 250 (in a passage that has been approved by the High Court in Maralinga (at 449 per Mason J, Menzies J agreeing), Pukallus v Cameron (1982) 180 CLR 447 (at 457 per Brennan J) and most recently in Simic (at 102 [41] per Kiefel J, French CJ agreeing)), Lord Chelmsford said that the power to order the remedy of rectification is "one which should be used with extreme care and caution". His Lordship continued: a person who seeks to rectify a deed upon the ground of mistake must be required to establish, in the clearest and most satisfactory manner, that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution. (Emphasis added). 115. Another formulation is that "clear and convincing proof" is necessary to succeed in a claim for rectification: Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 (at 345 per McLelland AJA); Franklins (at 712 [451] per Campbell JA, Allsop P and Giles JA agreeing); Ryledar (at 638 [161] per Campbell JA, Mason P and Tobias JA agreeing); Joscelyne (at 98 per Russell, Sachs and Phillimore LJJ). As Leeming JA recently observed in Seymour Whyte Constructions [2019] NSWCA 11; (2019) 99 NSWLR 317 (at 323 [15]), this insistence on clear proof reflects an ancient concern to not undermine the integrity of written agreements. 116. Furthermore, these observations must be viewed in the light of s 140 of the Evidence Act 1995 (Cth), which not only requires (by way of subsection (1)) that I must be satisfied on the balance of probabilities, but also (by way of subsection (2)) requires I consider each of the following matters when determining whether a case is proved on the balance of probabilities: (a) the nature of the cause of action or defence; (b) the nature of the subject matter of the proceeding; and (c) the gravity of the matters alleged. 117. Consistently with these mandatory requirements, in considering the nature of the equity of rectification, it is important to keep in mind the unlikelihood that commercial persons would have formed a common intention which was not reflected in the agreement which they deliberately reduced to writing. Such inherent unlikelihood can be seen as a reflection of what Mason J termed the "hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties": Maralinga (at 350 per Mason J), quoted with approval in Simic (at 117 [103] per Gageler, Nettle and Gordon JJ); Earl v Hector Whaling Ltd [1961] 1 Lloyd's Rep 459 (at 468 per Pearce LJ), quoted in Ryledar (at 641-2 per Tobias JA, Mason P and Campbell JA agreeing); see also Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 (at 483 [33] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ). Indeed, as Brightman LJ observed in Thomas Bates and Son Ltd v Wyndhams (Lingerie) Ltd [1981] 1 WLR 505 (at 521): as the alleged common intention ex hypothesi contradicts the written instrument, convincing proof is required in order to counteract the cogent evidence of the parties' intention displayed by the instrument itself. It is not, I think, the standard of proof which is high, so differing from the normal civil standard, but the evidential requirement needed to counteract the inherent probability that the written instrument truly represents the parties' intention because it is a document signed by the parties. (Emphasis added). 118. In Franklins, Campbell JA echoed these considerations when he explained (at 713 [459]) that great care is required in making factual findings of common intention that ground a rectification order. The reasons for such care were said to include issues of policy, such as the practical importance and social institution of making contracts in writing, of people ordinarily being able to rely upon documents, that are apparently regular, meaning what they say, and of the danger associated with imposing on a party a contract which they did not make. These well entrenched cautions have informed my approach to the finding of facts relevant to determining whether Icon is entitled to the equitable relief it seeks. 271 No submission was put that his Honour misstated the principle in the above passages. 272 How that convincing proof is reached is a matter of fact finding. Here, there were competing witnesses who were cross-examined as to their reliability, on their credit in that sense, for a full day each. The primary judge had the documents and had a period of a week at the hearing and reflection during and after the hearing to consider all the evidence as it fell out in its order and as relevant documents were put to witnesses. The real review in those circumstances involves the giving of appropriate weight to that advantage of the trial judge: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) [1999] HCA 3; 160 ALR 588 at 619 [90]; approved in Fox v Percy [2003] HCA 22; 214 CLR 118 at 126 [23], and more generally Lee v Lee [2019] HCA 28; 266 CLR 129 at 148 [55]. Not only did the primary judge have the advantage of a trial in which the evidence unfolded before him with the opportunities described in Earthline, but he made factual findings which were plainly "affected by their impression about the credibility of witnesses" (Fox v Percy 214 CLR at 127 [26]) having seen and heard them give the evidence. This is a further important advantage. This advantage includes "findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts": Lee v Lee 266 CLR at 148-49 [55]. No findings the subject of this advantage should be disturbed unless they are "glaringly improbable" or "contrary to compelling inferences": Fox v Percy 214 CLR at 128 [29] or where the trier of fact "palpably misused the advantage…of seeing and hearing the witnesses" Abalos v Australian Postal Commission [1990] HCA 47; 171 CLR 167 at 179 and Fox v Percy 214 CLR at 127 [26]. 273 The respect for clear findings of fact by the primary judge that are not capable of being described as glaringly improbable, or contrary to compelling inferences or the product of a misuse of the advantage cannot be unpicked by pointing to documents said to be contrary to the findings, being documents that were taken into account, or where like documents were taken into account, by the trial judge, if the conclusions of fact do not suffer the character to which we have referred. In the face of clear findings of the relevant mental state of Mr O'Reilly and Mr Hingston, the existence of some potential inconsistency does not of itself undermine the exactitude of proof brought about by the clarity of findings based on credit, unless the potential inconsistency taken overall amounts to glaring improbability, contrariness to compelling inference or misuse of the advantage. This is especially so when the mistake is to the effect of the contract, not as to the detail of text and wording. 274 Liberty emphasised at the outset that Austbrokers and Chase, and Icon and Liberty, were new to each other and that the third party liability policy was only one of the policies which Icon sought. Icon also obtained a material damage/contract works policy. Thus, Liberty emphasised that every communication between Austbrokers and Chase had to be examined to ascertain to which policy it related and how its content should be construed. On appeal, as had been pressed before the primary judge, Mr O'Reilly was said to have been confused and muddled, both in his contemporaneous dealing with Chase and Icon and in his evidence. 275 Liberty submitted that the events of September 2012 were a slender basis for a conclusion that the very detailed common intention was held by the parties. Liberty emphasised the differences in wording between the Austbrokers' quotation slip of 4 September 2012 for both a material damage/contract works policy and a third party liability cover (at [74] above) and the Chase proposal in response (at [77]) above). It submitted that Mr O'Reilly then incorporated this Chase wording into its report to Icon. (That is, however, not entirely accurate: two summaries were included, one was taken from the Chase document, another referred cover up to the defects liability period: see [79] above.) 276 Liberty stressed the difference between the two policies: the material damage/contract works and third party liability; and that on 21 September Chase asked Liberty to bind cover in accordance with the Chase worded placing slip: see [90] above. (This, however, must be understood against the background of the earlier conversations on about 11 September 2012 between Mr O'Reilly and Mr Burgess after Mr O'Reilly read the draft wording that had been sent: see [84] above.) 277 Liberty downplayed the conversations between Mr O'Reilly and Mr Burgess. His oral evidence was said to have been confused about the meaning and operation of the two policies. His concern was only as to one matter: condition 8 and the calculation of premium, which concern was allayed by reference to the run off clause (condition 15). The reference to the so-called label "contracts commencing" was the only other topic. No evidence of any other conversation was given. No proposed variation wording was given. This is the "slender basis". 278 Liberty submitted that even if it can be concluded that Mr O'Reilly had a mistaken view about how the run off provision operated, that opinion should not be equated with the holding of the detailed common intention alleged. This was so, in particular; it was submitted, when there was no alleged mistake about the cover provided during the annual period of insurance for occurrences during or even after the defects liability period. Mr O'Reilly's opinions and views were said to be the product of confusion, after a brief discussion with Mr Burgess, in which Mr O'Reilly made no distinction between the two policies: material damage/contract works and third party liability. 279 Before descending into the detail of the elaboration of these submissions it is appropriate to deal with this overall introduction, lest the detail of attack and refutation fragment and disaggregate a reality that is evident from the evidence and from the findings of the primary judge, based as they were, on seeing the witnesses and examining the whole record over a five day hearing. The evidence has an overall sweep of reality notwithstanding the blemishes on the complexion of the narrative that the busy dealing with affairs of commercial life and the necessary everyday working documentation to record such affairs often bring about. Further, a major, and in our view insurmountable, difficulty for Liberty are the findings of the primary judge on the states of mind of Mr O'Reilly and Mr Hingston. These findings were based in significant part on assessment of the demeanour of the two witnesses. There was, of course, a large body of documents in which to assess the credit and reliability of the two men. To this end it is of limited assistance to point out inconsistencies where those matters formed part of the trial record, unless a submission is put that the credit findings are to be attacked head on as glaringly improbable or contrary to compelling inferences, which submission at least in relation to Mr O'Reilly, was not made. The clarity of the findings of the primary judge concerning Mr O'Reilly and Mr Hingston should be recognised and respected. 280 The primary judge accepted Mr O'Reilly as reliable and honest in his recollections. The conversations that he had with Mr Burgess were not just about calculation of premium. They were as to the fundamentals of the cover his client required. A contracts commencing cover was required. Indeed, there was not one conversation on 11 September, but "a number" in September 2012: see para 39 of Mr O'Reilly's affidavit at [84] above. Both men understood what the meant: it meant cover for the individual contracts for their life, including the defects liability period. That did not mean he (Mr O'Reilly) and also Mr Burgess did not appreciate that there was an annual policy period cover. As Mr O'Reilly explained in his cross-examination sometimes policies would have options for both types of cover: see J[169] at [211] above. Mr Burgess can be taken to have understood this also. He explained to Mr O'Reilly how condition 15 (in the form of condition16 of the draft wording for the 2012 policy) worked: Give instructions on a contract by contract basis and obtain cover for the life of the contract up to the end of the defects liability period (implicitly, without having to renew annual policies year after year to ensure the security of cover for that project). 281 There is nothing confused or confusing or complex about this. Mr O'Reilly wanted contracts commencing cover for the liability insurance, as well as the material damage/contract works policy (as to the latter [80]-[82] above). It was explained to him that the run off position could be used to bring this about. 282 No doubt, unexplained by the conversations in September 2012, there was a possible difference in the Austbrokers' 4 September quotation slip expressly referring to the defects liability period ([74] above) and the Chase 7 September quotation in response ([76]-[78] above). Once, however, the then condition 16 was explained by Mr Burgess that possible difference became resolved, at least to Mr O'Reilly's understanding, such that he believed that the Liberty policy could operate as a contracts commencing policy, out of the structure of an annual policy. Mr O'Reilly explained why he did not seek a variation to policy wording then, and the primary judge accepted his evidence about this ([211] above). Mr O'Reilly's communications with his client (Icon) on 17 September 2012 (see [86] above) and 6 October 2012 (see [87] above) conform completely with his view that contracts commencing cover up to and including the defects liability period had been obtained. 283 The above is not a slender basis for a conclusion that there was from the outset a clear mutual understanding between Mr O'Reilly and Mr Burgess that condition 15 was the foundation for the Liberty policy to provide life of contract cover according to its terms in addition to the annual cover. The premium was initially based on $234,800,000 for two major projects: Tip Top and Green Square. In the 2012/2013 policy period, two other projects (Otto Apartments and Urbanest) were the subject of instructions and endorsements: see additional agreed facts 2 and 3. Thereafter until 2017, instructions were given in respect of a further 44 projects (48 in all). Thus from the first policy year the premium was based on the total value of the projects commenced in that year. Documents or events which may bear upon events and which might on one view cut across or be inconsistent with Mr O'Reilly's belief in Icon's invocation of condition 15 must be understood in the light of a clear, simple and mutual understanding about how the policy worked. There was no call for further discussion about the working of the policy. The evidence of Mr O'Reilly, which was accepted, leaves no basis to conclude that he and Mr Burgess were at cross-purposes. 284 Central to Liberty's argument on the appeal was the complaint that a common mistake as to the operation of what condition 15 meant and how it operated "should not be equated with the holding of a detailed common intention" about contracts commencing cover. It will be necessary to return to this proposition later. For present purposes, it suffices to say the following. As the primary judge made clear, this was not a rectification case in which the parties were mistaken as to the words used. If it were, there would need to be a clear common intention as to what words were intended. But it is not. It is a rectification case in which the parties were said to have a common intention as to the effect of the policy: that it could be utilised to provide contracts commencing cover up to and including the defects liability period. For Mr O'Reilly and Mr Burgess, this common intention was founded in a mistaken (on the hypothesis necessary for examining the rectification case) belief that condition 15 if invoked brought about that result. In these circumstances there was no requirement for there to be a common intention as to the words necessary to give effect to the common intention as to the effect of the policy. The Court must, however, determine with textual clarity the variation to the wording to give effect to the common intention: GPI Leisure Corp Limited v Herdsman Investments Pty Ltd (No 4) (1990) 9 BPR 17,461 at 17,465-6 (Young J); Muriti v Prendergast [2005] NSWSC 281 at [137] (White J); Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 at 669 (Simonds J); and Bush v National Australia Bank (1992) 35 NSWLR 390 at 407 (Hodgson J). 285 The attack on findings the subject of grounds 3 and 4 was at the heart of the appeal. Seven reasons were given for the conclusions that the findings were wrong. 286 The first reason was that contemporaneous notes and documents were said to be inconsistent with the common intention found. 287 Liberty submitted that the competing and conflicting quotation for the liability policy from Austbrokers and Chase in each of 2012 and 2015 and the policy in each year, showed that Liberty and Chase did not offer what was in the Austbrokers' quotation, and as such did not conform with the common intention, and there was no basis to conclude that Chase did not know the meaning and effect of the documents it send. 288 We reject these submissions. Chase's renewal quotations and placing slips in 2012 and 2015 were not inconsistent with the Contracts Commencing Intention. Once it is recognised that condition 15 was understood as it was between Mr O'Reilly and Mr Burgess (to the extent that their views were relevant) the policy conformed with that intention. The same applies to all later quotations and placing slips. 289 Liberty's submissions in oral argument examined the respective Austbrokers and Chase documents, emphasising the separateness of the material damage policy and the liability policy. This approach put to one side Mr O'Reilly's evidence that he viewed the two insurances as one package (even though the two policies were with two insurers - ACE and Liberty). This was said to reflect his "confusion". That does not follow at all. He viewed both as "contracts commencing". 290 Contrary to the submission of Liberty, the communication from Mr O'Reilly to Icon as to the content of the insurance reflected a view that contracts commencing insurance including cover during the defects liability period was in place. Mr O'Reilly and Austbrokers communicated to their client that the third party liability insurance arranged covered the defects liability period in respect of contracts commenced after the commencement of the period of insurance: see the insurance report of 7 September 2012 ([79] above), the certificate of insurance of 17 September 2012 ([86] above) and the insurance invoices of 6 October 2012 ([87] above). This was reflected in similar documents in later years. 291 It was submitted that the intention was inconsistent with various other records. Reference was made to the documents concerned with the Paragon Apartments, Lindfield Village and the Opal Tower projects. These and some others like them are documents that were before the primary judge and all available to be put to Mr O'Reilly in cross-examination. The primary judge dealt with them in J[174]-[179]. None of the documents taken individually or together are irrefutable objective evidence making the primary judge's findings as to Mr O'Reilly and his intention glaringly improbable. 292 In oral submissions Liberty referred to the fact that Mr O'Reilly was taken in cross-examination to many communications to which he was a party that were said to be inconsistent with his holding the relevant intention. Three were addressed in oral submissions. The first was the email, dated 9 December 2015, sent by Mr Bortone to Mr O'Reilly set out at [104] above; and the effect of Mr O'Reilly's evidence as described at [105] above. The primary judge's acceptance of Mr O'Reilly's evidence must be recognised to be in the context of all the evidence. At one level the email is plainly wrong. There was no issue but that the material damage coverage extended into the defects liability period. The relevance of the reaching of practical completion for insurance questions should be appreciated in a somewhat broader and more nuanced context, as illustrated in the next document. 293 The next (second) document addressed orally was an email on 14 October 2015 from Mr O'Reilly to the ANZ Bank in which he stated: I understand the builder has reached practical completion, and thus the insurance requirements in relation to the building activities have ceased and the owner would continue on with their property and liability insurance. This was said to be direct evidence of Mr O'Reilly understanding that liability cover was only to the end of practical completion. Again the primary judge accepted Mr O'Reilly. Objectively, also, it is hardly surprising that the financier should be told that the owner should obtain its own cover for property damage and liability after the point of time (practical completion) when the builder ceases to have possession of the site. The context of the email was a world away from understanding Mr O'Reilly's belief about his client's position under a contracts commencing policy invoked by condition 15, after practical completion and including the defects liability period. 294 The third document was an email from Mr O'Reilly on 5 July 2017 to Icon representatives providing information about policies. The email contained the following: The contract works and liability insurance applies for the life of the construction, and the period of insurance seeks to address this by stating "the estimated completion date", and not an expiry date. The policy will remain in place until Practical Completion is achieved. The certificate can be amended to reflect any revision to the anticipated completion if this assists. 295 This email was specifically addressed by the primary judge at J[174]-[176] (see [216] above) and see also J[224]-[226] ([246] above). 296 Liberty submitted that this revealed the confusion in Mr O'Reilly and that, even accepting his evidence as honest as the primary judge did, the Court could not be persuaded of the exactitude of evidence and agreement as required in a rectification case. 297 The examination of these documents should not take place in isolation. As Icon submitted, there was a powerful body of evidence to support the Contracts Commencing Intention being held by Mr O'Reilly, beginning with the conversations of September 2012. The quotation slips that he sent each year and the closing instructions that he sent to Chase each year: see the 4 September 2012 quotation sip: [74] above and the finding at J[245] ([258] above) that such a quotation slip was sent each year. 298 Further, the primary judge accepted Mr O'Reilly's evidence that he considered the material damage and third party liability policies to be part of the one program. 299 Significantly, project-specific certificates of insurance were regularly issued (examples in evidence were in January 2013; July, September and October 2014; May, June and November 2015 for the Opal Tower Contract; January and August 2016; and July and September 2017) by Mr O'Reilly to Icon. These certificates of insurance were in a form as set out at [103] above. 300 Taking the three documents upon which Liberty laid emphasis in oral address, it is to be noted that the 9 December 2015 email ([104] and [105] above) sent by Mr Bortone to Mr O'Reilly was sent a little more than a month before Mr O'Reilly signed and sent a certificate of insurance to Icon about the Paragon apartments projects in the form of that at [103] above; that the 14 October 2015 email to the ANZ Bank ([293] above) was sent a little over two weeks before Mr O'Reilly sent the certificate of insurance to Icon covering the Opal Tower ([103] above) on 2 November 2015; and that the 5 July 2017 email ([294] above) was sent eight days before Mr O'Reilly signed and sent to an Icon company a certificate of insurance in the form of that at [103] above for a Queensland project. 301 The second reason in the written submissions for the conclusion that the findings attacked in grounds 3 and 4 were wrong was that the primary judge failed to consider or properly construe emails Mr O'Reilly sent regarding other projects. Reference was made to the Clare and Flemington projects. Those documents were also directly addressed not just by the primary judge, but also by Mr O'Reilly in evidence: see J[174]-[176]. Again, the documents do not make the finding of the intention and the acceptance of the evidence in this regard glaringly improbable. 302 Thirdly, it was submitted that the primary judge failed to assess Mr O'Reilly's evidence of his conversation in September 2012 in the light of the proposed third party policy and the proposed material damage/contracts work policy. We reject that submission. The primary judge considered the evidence of Mr O'Reilly in the light of contemporaneous records. There is no basis to consider that his Honour failed to have regard to the liability policy which was the very subject of the discussion. 303 Fourthly, it was submitted that his Honour misquoted or misconstrued the text of Mr O'Reilly's email in 19 September 2012 at J[164] and J[219]. The quotation in J[164] as part of para 47 of Mr O'Reilly's evidence was accurate. It stated that the earlier (expiring) program was contracts commencing and so would be in run off. It can be accepted that the primary judge may have misconstrued the email in what his Honour said at J[219]. Mr O'Reilly was referring to the existing program as 'Contracts Commencing'. He was not referring to Chase's program as 'Contracts Commencing'. That said, whilst it is not a contemporaneous written reference to the Chase programme as such, it assists in the recognition that such a program was desired from Chase: "clean on" for the placement of a program with contracts commencing in the period covered pursuant to condition 15 as discussed the previous week. 304 Fifthly, Liberty submitted that the primary judge did not appreciate that the annual policy covered the defects liability period when he discussed Mr Hingston's evidence at J[192] and in the findings at J[230] and J[232]. It was submitted that the emphasis on the failure of Mr Hingston to mention the lack of cover past practical completion was misplaced and reflected a misunderstanding of the annual cover (if renewed) in a year when the defects liability period fell. These paragraphs are dealing, however, with cover for the life of the contract that commenced within that period being the subject of cover. All understood at least after some time in 2013 when declarations as to projects were made or after September 2013 when the premium change was made, that that was what Icon had sought and Liberty had granted. The question is, in such circumstances which removed the need for continuing annual cover for such contracts, whether the life of the cover extended to cover the defects liability period or was of some shorter duration. The evidence the primary judge found telling was that Liberty did not say that the life of contract cover did not cover the defects liability period. This did not involve a reversal of the onus of proof. It was plain that Icon, through Austbrokers, had sought contract specific cover; and was receiving it from Liberty. It did so by quotation slips that referred to the defects liability period. This had been sought from 2012. During 2012/2013, four projects were covered; Tip Top, Green Square, Otto Apartments and Urbanest. Three did not in the instructions refer to the defects liability period, one did (Otto Apartments). Similar inconsistency of documentation occurred in later years. The premium charged for the life of contract cover was exactly what it would be assuming condition 15 were invoked. This was so in a context where Austbrokers' quotations that went to Chase and Liberty and which were signed by Mr Hingston at least in 2012 and 2015 referred to the defects liability period. Mr Hingston was not accepted on his evidence about the "error" on his part as to the phrase "estimated project period" in the endorsements: J[232] and J[243]. The findings of the primary judge at J[192]-[203], J[230]-[232] and J[239]-[248] about Mr Hingston, after cross-examination, and based in significant part on the assessment of the witness, were to the effect that Mr Hingston understood that the instructions Liberty was being given were as to individual contracts or projects. It was not accepted that he thought the endorsements contained a provision for cover as described in the estimated project period. He was found to have the intention that contracts commencing cover would be given. He understood that condition 15 operated by giving instructions (as were given) and by paying premium (as was paid). The conclusions of the primary judge was a rejection of Mr Hingston's attempts to say that the cover remained annual cover with a variation through endorsements of life of contract cover, but only up to the date of practical completion. This involved a finding that Mr Hingston understood that the cover provided was contracts commencing cover up to and including the defects liability period (without the necessity for future renewal of the annual cover): see J[249] ([260] above). 305 Sixthly, it was submitted that an opinion about the construction and operation of condition 15 was not evidence of the holding of the Contracts Commencing Intention. It was submitted that in J[186] the primary judge wrongly equated evidence of an opinion by Mr Burgess about condition 15 in 2018 and 2019 with the holding of the contracts commencing intention in 2012 and 2015. 306 We reject these submissions. When the whole of the evidence and reasons are appreciated, there is no fundamental difference between the view shared by Mr O'Reilly and Mr Burgess as to how condition 15 operated and the Contracts Commencing Intention. The invocation of condition 15 which was discussed and decided upon in 2012 and consistently employed from 2012 (in respect of four contracts in the 2012/2013 policy year) was the means of obtaining a contracts commencing cover in an annual policy built textually otherwise on turnover. Mr Hingston was not accepted in his evidence that he did not appreciate that this was what was happening. It was plain to the point of demonstration that cover was being extended for the life of contracts. Mr Hingston's evidence that he understood the phrase "estimated project period" defined a temporal limit of cover to the date of practical completion was not accepted. He understood how the instructions given by Icon and the payment for each contract was the equivalent of the operation of condition 15. He later called the policy contracts commencing. The phrase in the industry denoted cover that included the defects liability period, past the annual period of insurance in which cover for the contract attached 307 Seventhly, Liberty sought to identify an error in J[185] and J[231] in the email of 17 May 2017 of Mr Vernon of Chase to Liberty. The primary judge failed, it was said, to have regard to the fact that it was made under the 2016/2017 policy period not the 2013/2014 period when the contract was declared. This, it was submitted, revealed the primary judge's lack of appreciation of the cover actually provided by the annual policy. We reject these submissions. The important point that is plain from the document is that Chase described it as contracts commencing cover. The current policy period (2016/2017) was identified, but so also was the "TPL endorsement placing slip 030914", the endorsement being dated 3 September 2014. There is no undermining of the importance of Chase being of the view that the policy was contracts commencing. That was how it was operating. 308 It can be accepted that there is an ambiguity inherent in any label that the parties gave to contracts and policies. It can also be accepted that not all documentation was entirely happily consistent over the years. It is, therefore, helpful to state some matters that are clear, most objectively clear. The policies issued at least from 2013 covered in each policy year all contracts entered into and commenced during that policy year that were declared to Liberty. Mr O'Reilly, Mr Burgess and Mr Hingston knew that. The premium in the 2012/2013 policy year was based on the total value of the four contracts declared by instructions. Mr O'Reilly, Mr Burgess and Mr Hingston knew that. From the 2013/2014 policy year the premiums were based on a deposit premium on $50m at .0595% (the same rate as in 2012/2013) with the same rate governing premium in each following year on the full contract value of each project, as declared. Mr O'Reilly, Mr Burgess and Mr Hingston knew that. Thus, the insurance provided (and its proper construction) was not limited to liability for damage happening during the 12 month policy period, but extended for the length of the relevant contracts. Condition 15 required instructions as to unexpired contracts to be covered to the end of the defects liability period. In respect of each project, and relevantly, the Opal Tower Contract, instructions were given as to coverage of individual contracts. Mr O'Reilly, Mr Burgess and Mr Hingston knew that. All these instructions were given after a conversation in 2012 between the agents to the effect that henceforth instructions could be and would be given under the then condition 16 in the draft wording for the 2012 policy (condition 15 in the 2015 policy) to effect contracts commencing cover for individual contracts. Condition 15 provided for the period of insurance to be extended to include the defects liability period. No endorsement stated that the period of insurance was extended. Mr Hingston was not accepted on his evidence that the endorsement was so intended to extend cover. Some communications (such as the 9 December 2015 email of Mr Bortone) referred to a period of cover. Mr O'Reilly explained his lack of concern with that to the satisfaction of the primary judge. An estimated (though temporally precise) project period was given in each endorsement. The basis of calculation of premium for each project, and displayed in the endorsement, was the same as the premium referable to condition 15: the full value of the project during and after the policy period. All parties knew at least after 2013 that the cover was by reference or included contracts commencing in the relevant policy year that had been declared. 309 When one looks at the whole of the evidence, and recognises that inconsistencies of expression and documentation can arise in the carrying on of business over a period of years, one is driven to fundamentals to understand the actions and intentions of the parties. The intermediaries were intending to invoke condition 15. That is what they spoke of at the time of commencement of cover. Mr Hingston understood that Liberty was given instructions contract by contract (as could be done under condition 15) and charged and was paid a premium of an amount and at a rate as was chargeable under condition 15. Mr Hingston was not accepted that he overlooked changing the wording in the endorsements to refer to period of cover. The primary judge was comfortably satisfied that Mr Hingston was prepared to offer cover to Icon on the basis that the defects liability period was covered. It is clear that the finding was directed to coverage of that period as part of the life of contract cover or contracts commencing cover granted by Liberty. 310 The only debate (now) is whether the contracts commencing cover (for that is the cover that Icon was plainly given: cover for the life of the projects) was provided only up to the date of practical completion, unless an annual policy had been renewed when the damage occurred, and so cover past that point of practical completion could only be referable to a later annual policy and later and separate premium, or whether contracts commencing cover was provided, as usually done under contracts commencing policies, and as done if condition 15 were invoked: up to the end of the defects liability period for a premium based on the total value of that contract. It is to be recalled in this context that the total value of the contract on which Liberty received premium was payment pursuant to a contract under which the insured (Icon) undertook (as part of the consideration that it provided in exchange for payment) responsibility and potential liability for defects manifesting during the defects liability period. These were all matters of which experienced insurance professionals such as Mr O'Reilly, Mr Burgess and Mr Hingston were aware. Once Mr Hingston's evidence that he understood "estimated project period" in the endorsements to mean "period of insurance" was rejected, it is plain from all the surrounding circumstances that Mr Hingston recognised, as the primary judge found, the way the policy operated after accession to Icon's request: as a contracts commencing policy including the defects liability period. He knew that Liberty received a premium that was referable to such cover as if or on the basis that condition 15 had been invoked. This was in substance the same understanding and intention about the effect of cover as held by Mr O'Reilly and Mr Burgess. That the clarity of Mr Hingston's understanding and intention may not have been sourced in an express discussion about condition 15, as was Mr O'Reilly's, does not gainsay that he was under the same mistake that the cover was contracts commencing including the defects liability period. 311 Mr Hingston was cross-examined about his understanding of the invocation by Icon of condition 15 and contracts commencing cover. In that cross-examination Mr Hingston said that he did not believe condition 15 was being used, although he accepted that instructions were given for contract or project specific cover at a premium that was by reference to the total value of the contract. His evidence contained the following (at Tpp 282 and 283): And I want to suggest to you that you knew and understood at all times until at least 2013, September 2013, and September 2017 that by Icon notifying Liberty of various projects that were not due to be completed until after the expiry of the existing policies and paying a premium calculated by applying existing rates under the annual policies for the total value of work, that Icon was obtaining run-off cover under the terms of the annual policy?---That's not my understanding. Well, I want to suggest, right at the outset, that that was your understanding, Mr Hingston. You dispute that, do you?---I don't believe that Icon were requesting run-off cover when a new project was commencing. But you agree, I suggest, having reviewed condition 16 at the time, that Icon had the right under condition 16 as you understood it, to obtain that run-off cover provided only that they gave the appropriate written instructions and paid the necessary additional premium. That's what you understood, wasn't it, as at May 2012?---Yes. And I want to suggest that you knew thereafter and at all times between at least 2013 and 2017 that for each of these projects that Icon notified, you paid a premium calculated on exactly the same basis set out in Condition 16, Run-off Cover. Do you agree with that?---The basis by which arriving at the premium was the same. Not once did they seek to obtain run-off cover, though. Well, so is the distinction you're drawing the fact that they didn't use the word "runoff cover"? Is that the distinction you're seeking to draw?---The distinction I'm drawing is that at the commencement of a contract, commencement of works, it would be highly unlikely that an insured would be requesting cover for run-off for an incomplete project at that point in time. So you just thought it was "unlikely" that that's what they were doing, is that right?---No. My understanding is that they were notifying us, and we were endorsing the policy for an amended period of insurance to take into consideration that extended period under the annual policy to cover that specific project. But - so that's what you thought was going on through this process, notwithstanding, I suggest, that your clear understanding back in May 2012 was that provided Icon gave appropriate written instructions and paid the additional premium, they had the right to run-off cover under condition 16?---Yes. You understood that, as well?---Yes. 312 When one appreciates that the primary judge did not accept Mr Hingston's evidence about the "error" in not amending the endorsements, it is difficult to accept that the finding that Mr Hingston appreciated the cover included the defects liability period and that he knew contracts commencing cover was being provided does not amount to a finding that Mr Hingston understood condition 15 was being exercised. No finding in such terms was made. The findings at J[248] ([260] above) was, however, plainly not directed to the operation of the insuring clause in the annual cover, rather to the extent of the contracts commencing cover consequent upon declaration of, and payment of premium in respect of, each contract. 313 Liberty submitted in respect of ground 5 that the primary judge's conclusions at J[266]-[270] were difficult to discern. The submission was founded on an absence of clearly expressed communication, beyond the O'Reilly/Burgess conversation in September 2012. The submissions paid insufficient regard to the expression of principle by Campbell JA in Ryledar at 660 [281] (not Franklins) quoted by the primary judge at J[267] as follows: In my view, when that intention relates to the terms upon which they will contract with each other, it is still necessary for them to know enough of each other's intentions for it to be said that there is a common intention. They might come to know of each other's intentions in this way through those intentions being directly stated, or they might come to know of them through the various other means by which one person's intention can become known to another person. Those means can sometimes involve a process of conscious and deliberate inference. Those means can sometimes involve simply perceiving a gestalt in a series of events. Those means can depend to some extent on the people involved sharing a common understanding of how particular bodies of knowledge or markets or social institutions they are operating in work - the experienced surgeon, or the experienced chess player, can sometimes see what another surgeon, or chess player, is seeking to do, in a way that an inexperienced person cannot. What matters for present purposes is that for a negotiating party to perform actions or say words from which the other party can gather his or her intention is itself a form of communication. Negotiation of any contract takes place in a context in which various facts are known or assumed by the negotiating parties. Sometimes, for example, if a contract is negotiated in a context where there are well understood business practices and conventions, and nothing is said about those practices and conventions not applying, it can be legitimate to conclude that both parties to the contract intended to act in accordance with those practices and conventions, even if they did not expressly communicate to each other that they intended to act in accordance with those practices and conventions. This view of what is needed before an intention is a common intention, accords, it seems to me, with the Australian case law since Joscelyne. (Emphasis added in the primary judgment.) 314 On the findings of the primary judge, the parties came to know of each other's intentions as part of a process of inference. As Campbell JA said: "Those means can sometimes involve simply perceiving a gestalt in a series of events." This can include "sharing a common understanding of how particular bodies of knowledge or markets or social institutions they are operating in work." To paraphrase Campbell JA, it can be said that the experienced insurance intermediaries and underwriter present here could see what was happening: contracts commencing cover was the subject of regular instructions and payment of premium in a way reflective of invocation of condition 15 in a market where such cover was to be for a period that included the defects liability period and such period of cover conformed with the basis of premium chargeable under this policy by its express terms (condition 15). In those circumstances and in the light of the matters set out at [308]-[310] above, the finding at J[270] that the parties knew of each other's intentions and that the contracts commencing intention was commonly held was clearly available, indeed compelling. 315 Grounds 3-6 are rejected.

[43]

B: Whose intention? Grounds 1 and 2 316 Grounds 1 and 2 were in the following terms: 1. In determining whose intention was relevant, in connection with the claim for rectification made by the first respondent (Icon), the learned trial judge erred in concluding that: (a) the actual authority of Chase Underwriting Pty Ltd (Chase) extended to the provision of "contracts commencing policies" ([146]); (b) the intentions of Chase were to be attributed to the appellant (Liberty) for the purposes of ascertaining whether there was a relevant common intention ([146]); (l) the intention of a relevant party can be established by reference to the ostensible authority of an agent for that party ([147]-[152]); (m) Mr O'Reilly was the relevant decision maker for Icon and his particular intentions should be attributed to Icon (at [131]). 2. In determining whose intention was relevant, in connection with the claim for rectification made by Icon, the learned trial judge ought to have concluded that: (a) the relevant intention is that of the person who is, in fact, the decision maker for that party in relation to the transaction; (b) having found that Mr Hingston was that decision maker for Liberty ([157]), the intention of any person at Chase was not relevant to, or determinative of, Liberty's intention; (n) in any event, on the evidence, no person at Chase had actual authority from Liberty to offer "contracts commencing" liability policies to Icon in September 2012, or at any relevant time, absent the express agreement of Liberty; (o) Mr O'Reilly was not the decision maker for Icon and, accordingly, his intention was not relevant to, or determinative of, Icon's intention. 317 The relevant intention is of the person whose task it was to make the relevant business judgement upon the terms upon which the corporation should contract. At one level the answer to that question for Liberty was straightforward: Mr Hingston. The primary judge concluded, however, at J[146] ([201] above) that Chase's intentions were to be attributed to Liberty, because Chase's authority extended to the provision of contracts commencing policies. 318 Liberty submitted that this conclusion involved error. First, the error was the conclusion's inconsistency with the finding at J[157] that Mr Hingston was the decision-maker for Liberty. Secondly, and more fundamentally, it was submitted that there was no evidence that anyone at Chase had any authority to offer policies with a different wording. Mr Hingston's evidence as to the nature of the relationship was not challenged. The position was as summarised by the primary judge at J[135]-[137] (at [196] above). 319 Liberty submitted that the evidence referred to by the primary judge at J[146] did not support the conclusion drawn. 320 The relevant conversation was that between Mr Burgess and Mr Hingston. Mr Hingston said it took place on 20 September 2013. For reasons expressed later we think it more likely to have been 2012. In any event, as to its content, Mr Hingston deposed in paras 77-79 of his affidavit that are set out at [202] above and the relevant cross-examination which is set out at [203] above. 321 The evidence of Mr Hingston was the subject of comment and criticism by the primary judge. For present purposes as to authority it is sufficient to say that the oral evidence of Mr Hingston was that he left it to Mr Burgess to confirm the nature of the changes. Mr Hingston was being told, and he understood, that Icon was requesting and Liberty was agreeing to a form of cover that could be described as contracts commencing. That may have required Mr Burgess to "confirm the nature of the changes" with Austbrokers, but we do not agree that Chase or Mr Burgess had any actual authority to bind Liberty to any form of policy different to the wording. That said, Mr Hingston did say to Mr Burgess that he left it to him to confirm with Icon or its broker the nature of the changes to bring about the result desired. In those circumstances, it is difficult to conclude that Mr Burgess did not have authority to tell Mr O'Reilly Icon's wishes could be effected. If he did so by communicating a mistaken view of condition 15 (on this hypothesis) he can be seen to have been given authority to make the statements to communicate his views and so his state of mind is relevant. If this conversation between Mr Hingston and Mr Burgess took place in 2012, that is what Mr Burgess did. If it took place in 2013, that is what he had done a year earlier. In either case, what Mr Burgess thought about how the change of approach could be effected falls within the actual authority Mr Hingston gave him to effect the contract specific cover with a satisfactory premium. Though perhaps referable to the question in the contract case as to what the parties were doing (as distinct from the ascertaining of the objective meaning of the contract) the conversation between Mr Burgess and Mr Hingston can be seen as the grant of authority to Mr Burgess to engage condition 15, if that was how he thought he could effect Icon's wishes. 322 That makes Mr Burgess' state of mind relevant. It is also relevant because Mr Burgess conveyed his state of mind in the September 2012 conversations which shaped Mr O'Reilly's state of mind from 2012. It also assists in understanding the context of Mr Hingston's views and whether there was a communication inferentially of the common state of intention. 323 The question of the availability of ostensible authority to found the attribution of Mr Burgess' state of mind to Liberty is an important question. The relationship between holding out an agent as having apparent or ostensible authority and rectification is not to be viewed mechanically by reference to one being a matter of contract and so common law and the other being a matter of rectification and so equity, and thus in two different universes of discourse. The two are directed to different but related subjects: contract formation and true contractual intention. If a principal holds out an agent as having authority to form a contract (when that is not the case) and the agent and the other party have a common subjective intention as to that contract should contain, it is difficult to see why that subjective intention should not bind the principal. After all, if the agent had apparent or ostensible authority to agree upon and document such contract conformably with the subject common intention, the agent's failure to document the transaction in accordance with the common intention is hardly a reason for concluding that the common intention does not bind the principal. 324 Here, however, there was no holding out of Chase by Liberty to Austbrokers or Icon. No statement of Liberty to Mr O'Reilly armed Mr Burgess with any authority beyond his actual authority. The evidence of the conversation between Mr Burgess and Mr Hingston was not a holding out to Icon or Austbrokers. It either gave rise to an extension of Mr Burgess' actual authority, or it did not. Contrary to the primary judge's conclusion at J[153], there was no evidence that Liberty held out Mr Burgess to Icon or Austbrokers to negotiate or agree upon any changes. 325 Liberty also submitted that Mr O'Reilly's evidence was irrelevant as he was not the decision maker, only the recommender. We reject these submissions. The trust placed in Mr O'Reilly by all three Icon executives meant that they agreed to the terms of the policy as propounded and understood by Mr O'Reilly as contracts commencing insurance extending to the defects liability period. There was ample communication with Icon to that effect. Mr O'Reilly made the required business judgment upon which his client should contract: see the cases cited by the primary judge at J[131]-[133], in support of this position. We agree with the primary judge's analysis. 326 Thus, while there is some force in ground 1(b) as to ostensible authority it is not determinative of the appeal and the balance of the grounds should be rejected.

[44]

C: Error regarding Mr Hingston's evidence: ground 7 327 Ground 7 was in the following terms: 7. The learned trial judge erred: (a) in finding that Mr Hingston's evidence was "artful and unpersuasive" ([241]) in circumstances where - (i) the first item of evidence relied upon by the learned trial judge, at [243], was not inconsistent with how his Honour determined the relevant text should be construed (at [84]); (ii) the second item of evidence, at [244], was consistent with the contemporaneous documents to which the learned trial judge was referred in written submissions but failed to address in the reasons; (p) in the weight he gave, (at [246]-[248]), to Mr Hingston's email communications in November and December 2018, six years after the alleged formation of the "Contracts Commencing Intention", and to Mr Hingston's evidence about those emails. 328 Liberty submitted that the criticisms of Mr Hingston's evidence (at J[241]) as "artful but unpersuasive" was based on evidence that the primary judge misunderstood or misconstrued. First, the evidence of Mr Hingston that he left it to Mr Burgess to sort out the details of the insurance in September 2013 were misconstrued as far too wide. That, even if correct, was an inadequate basis to impugn a finding based on viewing the witness under cross-examination, as a whole. 329 Criticism was also made of J[243] ([257] above). It was submitted that Mr Hingston's views as to the phrase in the endorsement accorded with the primary judge's construction. But that is not the point. In looking not at the disembodied objective construction, but at his (Mr Hingston's) subjective intentions, Mr Hingston was not accepted. The evidence as to that subjective intention included all the matters to which we have referred at [304]-[312] above. 330 Liberty submitted that the criticisms in J[244] were not justified. We reject that when one considers the whole of the cross-examination on the topic at Tpp 305, 306-307, 308-310, 314-316, 318-320, 329, 331 and 347-350 which we do not propose to set out. 331 Liberty further submitted that too much weight was given to the 2018 emails ([235]-[237] above). We reject that. These were powerful expressions of basic recollection of an experienced insurance professional, inconsistent with otherwise "artful" evidence. The "laboured attempt" (J[246]) to explain them away was an important credit finding based on observation of demeanour in the context of an appreciation of the documents over a five day trial. 332 The difficulty for Liberty is that the primary judge made clear factual findings about Mr Hingston's contemporaneous state of mind. They were made with the advantage of seeing the witnesses and in the presentation of documentary material over a five day trial. Not only was there no glaring improbability about the finding, it conformed with the structure and commercial common sense of what was objectively done. 333 Ground 7 should be rejected.

[45]

D: Error in equating 'run off cover' with "Contracts Commencing Intention": ground 8 334 Liberty submitted, as related to the asserted failure to identify the "mistake" (see [275]-[278] above), that the reasons fail to distinguish between, on the one hand, how run off cover under condition 15 might be enlivened and, on the other, the nature of contracts commencing cover and the Contracts Commencing Intention. This depended upon a fixed and immutable taxonomy in submissions between two mutually exclusive types of cover: annual turnover policies and annual contracts commencing policies. To a degree that juxtaposition was derived from how the case was presented. But in this submission it is given a logical rigidity not warranted by the evidence. Thus, according to the submission, it was somehow not to the point to say that Mr O'Reilly wanted contracts commencing cover and was prepared to accept that he had achieved that, including cover to the end of the defects liability period, by the use of condition 15. As he said in evidence in answer to the judge (see [211] above) "sometimes those policies would have options for both". That said, in his evidence Mr O'Reilly expressed the view that by condition 15 and the payment of premium based on the total value of the contract Icon obtained only contract commencing cover to the end of the defects liability period. Whether or not the belief of Mr O'Reilly equated with the proper construction of the policy with its annual component is not to the point. The means of getting contracts commencing cover was through the invocation of condition 15. Mr O'Reilly and Mr Burgess discussed just that. Mr Hingston understood that is what was occurring or at least the equivalent: that is why it can be taken that he (as an experienced underwriter) did not amend the endorsements to have anything in them about the period of insurance. Mr Hingston was not prepared to admit it directly, but his evidence was to the same effect: see J[244] and J[248] ([257] and [260] above) and the cross-examination at [203] above, and also at Tpp 305, 306-307, 308-310, 314-316, 318-320, 329, 331-332 and 347-350. 335 It can be accepted that there was a degree of polarisation in the cross-examination and in the running of the case between annual turnover and annual contracts commencing policies; but it cannot be denied that contract commencing cover of a kind was given: that was effectively common ground. Mr O'Reilly and Mr Burgess expressly based this on the understood and intended operation of condition 15. Mr Hingston sought to maintain the position of an annual turnover policy varied by an endorsement to a date of practical completion. He was not accepted in crucial respects as to his understanding and intention. The primary judge was comfortably satisfied that Mr Hingston was prepared to offer Icon contracts commencing cover including the defects liability period. The rigidity of the dichotomy and the forensic point sought to be made by Liberty from it do not bear the weight of the evidence. 336 Thus, it is of central importance to understand that Mr Burgess' view was conformable with what he told Mr O'Reilly in 2012: Condition 15 could be used to provide a form of contracts commencing cover. It was then up to the underwriter to charge such premium as it wished for any cover provided in the annual period provided under the insuring clause, to which the cover under condition 15 was added. 337 The conversation between Mr Burgess and Mr Hingston either in 2012 or 2013 can be seen to reflect the use of the policy for contracts commencing cover. A conclusion (for Icon's notice of contention) that it occurred in 2012 is assisted by the fact that two additional contracts (Urbanest and Otto Apartments) were declared in the 2012/2013 policy year in addition to the Tip Top and Green Park projects which were declared at about the commencement of cover and the total value of which formed the basis of the initial premium. Indeed, as propounded in this notice of contention, premium was calculated from 2012 onwards on the basis of total contract values for declared projects: in 2012, for four such contracts. Given that Tip Top and Green Park were substantial contracts and both were known at inception there was nothing strange in assessing the initial premium based on their total contract value. There was, however, a change in 2013 by the introduction of a deposit premium based on $50 million. Ultimately, it is not critical as to when the discussion between Mr Burgess and Mr Hingston took place, or whether it was a substantial change or not. Certainly, in September 2013 there was one change: a small deposit premium was taken for the annual cover. It was up to Liberty to set it. It was prepared to set it, and to some degree set it off against premium based on total contract value for contracts delayed by instructions one by one. This, in effect, was using the policy, the premium provisions and condition 15, to effect contract commencing cover. Liberty and Mr Hingston knew at least from 2013 that they were providing life of contract cover to contracts about which they were given instructions and for which Liberty was charging premium in the amount and method of calculation precisely provided for in condition 15. 338 Ground 8 should be rejected.

[46]

E: Misapplication of Jones v Dunkel: grounds 9 and 10 339 Grounds 9 and 10 were in the following terms: 1. The learned trial judge erred in concluding that, upon an application of Jones v Dunkel (1959) 101 CLR 298, an inference should be drawn against Liberty, arising from the absence of Mr Burgess from the witness box, that his evidence would not have assisted Liberty ([250]-[265]). 2. The learned trial judge ought to have concluded that no such inference should be drawn, particularly in circumstances where: (a) the only evidence of Liberty's direct knowledge of the state of mind of Mr Burgess related to his opinion on construction and operation of condition 15 ([262]), arising as a result of communications before any allegation of an entitlement to rectification was raised, and such evidence would have been inadmissible; (b) otherwise, the evidence revealed that Liberty did not have knowledge of what Mr Burgess might say in evidence about his conversation with Mr O'Reilly because Liberty and its lawyers were prevented by Mr Burgess' employer from speaking to him and otherwise had no direct source of information about what he might say; (a) notwithstanding that Ms Stojanovich, the solicitor for Liberty was recalled for cross-examination, the learned trial judge - (i) failed to understand that her evidence was that, while she understood that Ms Mitchell was telling her what Ms Mitchell said derived from Chase representatives (including Mr Burgess), Ms Stojanovich did not know whether, in fact, it did so derive from Mr Burgess; (ii) instead found, erroneously, that an aspect of the evidence of Ms Stojanovich was not credible ([263]); (b) counsel for Icon chose, twice, not to ask Ms Stojanovich what Ms Mitchell had said to her. 340 We propose to deal with these grounds briefly. First, Mr Burgess' state of mind on the operation of condition 15 was plain. He thought it operated in a way to provide contracts commencing cover within an annual turnover policy. 341 Secondly, Mr Burgess could just as easily have been called by Icon. 342 Even if the inference was not properly drawn, a matter which we need not decide, we consider that the primary judge's findings about Mr Burgess' intention was clear. The view of Mr Burgess that was conveyed to Liberty was that Icon had obtained run off cover. The Jones v Dunkel finding was not necessary for the primary judge's views in this regard: J[265]. 343 We do, however, have doubts as to whether the inference should have been employed. Both parties were able to call Mr Burgess. He was not a witness in the control of either. His evidence was "proof which it was in the power of [both sides] to have produced": Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970.

[47]

F: Error regarding Annexure "A" Endorsement: ground 11 344 Ground 11 was in the following terms: 3. The learned trial judge erred in concluding that the Annexure "A" Endorsement reflected the "Contracts Commencing Intention". 345 The primary submission, separate from earlier submissions with which we have dealt is that the endorsement renders the existing policy "a nonsense". Further, or in elaboration, the rectified policy is not, it was submitted, a contracts commencing policy. Under the "guise" of an endorsement it replaces an entire insuring clause, and removes entitlements that appeared in cll 2 and 3 of the original insurance clause. It continues to define cover by reference to an annual period of insurance of 12 months. It amends condition 15 in ways unconnected with any 'mistake' and retains other aspects of condition 15. 346 Also, it was submitted, rectification is not available when the parties did not consider such a form of words in September 2012, or otherwise. 347 The form of relief was submitted to embody the confusion at the heart of the rectification case and to travel beyond the evidence. 348 We reject these submissions. First, it is necessary to repeat that the mistake was clear: that contracts commencing cover up to and including the defects liability period was provided for by the policy, whether because of a misconstruction of condition 15 (Mr O'Reilly and Mr Burgess) or because of a recognition of the grant of equivalent cover (Mr Hingston). The parties believed that the policy operated to afford, and that the insured was receiving under the insurance arrangements between the parties, contracts commencing cover, including the defects liability period. The findings as to Mr Hingston, and the objective evidence, supported a finding that his intention was that contracts commencing cover was being afforded. The common intention found was to that effect, and that such cover included the period up to and including the defects liability period. This was a mistake as to the effect of the contract. Thus, the task was to fashion a form of words to give effect to the common intention as to the effect of the policy: see [284] above and the cases there cited. There was no necessity to find a common intention for this form of words. There was and is no confusion at the heart of the rectification case. As the respondent submitted, the form of the relief accorded with the Contracts Commencing Endorsement which Mr Burgess and Mr Hingston drafted in December 2014. It was an endorsement that Mr Hingston said in evidence had "the hallmarks of a contracts commenced endorsement that could be applied to other policies": Tp 352 ll 2-3. One infers that "other polices" are (as here) annual turnover policies. 349 Liberty's submissions hinted at, but did not squarely assert, some unfairness in how the matter of the form of relief came forward. On the evidence, the endorsement gives effect to a contracts commencing intention, up to and including the defects liability period for 12 months with a maximum construction period of 36 months. These periods of time were amply supported in the evidence. No attempt was made to show otherwise. 350 For these reasons the appeal would be dismissed with costs if it were necessary to deal with it in substance, as opposed to consequentially upon the upholding of the cross-appeal. 351 Thus, at present (and subject to any debate as to form, for which we will provide in the orders) we would propose to make orders as follows: (1) The cross-appeal be allowed. (2) The appeal be dismissed. (3) Orders 1 and 2 and declaration 6 made by the Court made on 26 October 2020 in VID781/2019 be set aside and in lieu thereof: (a) Declare that in December 2015 the applicant (Icon) invoked condition 15 of the Third Party Liability Policy numbered 438396 issued by the first respondent (Liberty), and Icon thereby obtained insurance cover from Liberty in terms of said condition 15 for the Opal Tower Contract and Project in accordance with the terms and conditions of said policy up to and including the end of any testing and/or defects liability and/or maintenance periods under the contracts which Icon entered into and under which Icon performed work in connection with the Opal Tower Contract and Project, and thereby up to and including at least 24 and 27 December 2018. (b) Declare that the cracking observed on 24 and 27 December 2018 at the "Opal Tower" development at 98 Bennelong Parkway, Sydney reflected or was the result of an Occurrence in connection with the Insured's, that is Icon's, Business within the meaning of said policy numbered 438396 that occurred within the period of cover of the said 2015/2016 policy. (4) Order that Liberty pay Icon's costs of the proceeding as agreed or assessed. (5) Liberty pay Icon's costs of the appeal and cross-appeal as agreed or assessed.

[48]

QBE's Appeal 352 QBE's appeal concerns whether the Opal Tower and its component parts are a "product or thing" for the purpose of the defined scope of cover under the QBE policy, being a third party liability policy that Icon entered into for the period 20 September 2018 to 31 December 2018. 353 We make this preliminary observation. The language in the definition of "Product" (defined to include a "product or thing") is broad. However, a difficulty arises if one adopts a too broad definition of the term "Product" (including a "thing") when the policy is considered as a whole. Even a literal meaning of a word in a definition provision must not be permitted to prevail where it would produce a result not consistent with the object and purpose of the policy. The ambit of the definition of "Product" should be interpreted in relation to the operation of the policy as a whole and should be construed in the operative part of the policy that delineates the cover to be provided. Care must be taken not to give a meaning that is too broad in application which negates the evident purpose of the policy. We will return to this approach later in these reasons by reference to the definition of "Product" and the other provisions of the policy. 354 As indicated above, we have reached the conclusion that the appeal should be allowed. Before setting out our reasons, we will first briefly set out some essential background facts and describe the approach and reasoning of the primary judge.

[49]

Background facts and the broad scope of the issue 355 The factual background to the QBE dispute is set out at J[1]-[6], [39]-[40] and J[280]-[290]. There were no contested facts in the court below; QBE did not call any evidence and did not cross-examine any of Icon's witnesses. There is also no dispute on appeal as to the primary judge's fact-finding. 356 The QBE policy was issued on 20 September 2018. The QBE policy was in a similar form to the 2017/2018 policy discussed above at [34] and included the same Contracts Commencing Endorsement, as follows: Endorsement - TPL008 The following Endorsement forms part of the Third Party Liability Policy Number: 438396 Contracts Commencing Amendment to Policy It is hereby noted and agreed that this Policy is endorsed to include the following amendments: A) The Schedule is amended to include: Construction Period Maximum Construction Period 24 Months any one Contract Including any testing and commissioning period Maximum Maintenance/ Defects Liability Period 12 Months any one Contract B) The Insuring Clause is amended to read as follows: The Insurer(s) agree to: 1. indemnify the Insured in respect of all amounts which the Insured shall become legally liable to pay in respect of: (a) Personal Injury; (b) Property Damage; (c) interference with traffic or to property or the enjoyment of use thereof by obstruction, trespass, loss of amenities, nuisance, 1.1 happening during the Construction Period as a result of an Occurrence in connection with the Insured's Business 1.2 happening during the Period of Insurance as a result of an Occurrence in connection with the Insured's Products Liability and/or Completed Operations C) Condition 8 (Adjustment of Premium) is deleted and replaced by: 8. Adjustment of Premium The premium for this Policy is provisional and is based on the estimated value of works to commence during the Period of Insurance. The Insured shall, as soon as practical after the expiry date of this Policy, declare to the Insurer(s) the actual total value of works for all contracts that commenced during the Period of Insurance. An adjustment premium shall be determined by determining the difference between the provisional premium and the sum of the agreed rate applied to the actual total value of works commenced during the Period of Insurance. The adjustment premium paid to the Insurer(s) or refunded by the Insured(s) as the case may be. Notwithstanding the above, the maximum allowable return premium will be 25% of the provisional premium paid. D) Condition 15 (Run Off Cover) is amended to read: 15. Run Off This Policy will continue in full force and effect at terms and conditions prevailing immediately prior to expiry for all incomplete contracts as at date of expiry until completion of those contracts including any testing and/or defects liability and/or maintenance periods subject to the Maximum Construction Period noted in the Schedule. On expiry of the Period of Insurance the Insured is required to provide the Insurer(s) with a list of all Insured Contracts that commenced during the period of insurance and additional premium is to be calculated as per Condition 8 (Adjustment of Premium). Any contracts not declared to Insurers will not be covered by this Policy. E) The following definition is deleted in its entirety Turnover Turnover is defined as the total value of work completed during the preceding twelve months period for the Business and/or Activities of the Insured to which this Policy applies, including the value of principals supplied materials where appropriate In all other respects this Policy remains unaltered. 357 It is cl 1.2 of the insuring clause (as amended by endorsement TPL008) with which Icon's claim, and QBE's appeal, was centrally concerned. The following definitions are relevant to construing that clause: Completed Operations Completed Operations means Construction Operations that have been completed and handed over to the Principal/Owner and where any maintenance/defects liability periods have expired. Construction Operations Construction Operations means all contracts for the construction erection installation alteration manufacture fabrication assembly repair or service of or to tangible property carried out by or for the Insured in respect of which the Insured is or was contractually obligated to effect Insurance. […] Product Liability and/or Completed Operations Product Liability and/or Completed Operations means liability for compensation in respect of and arising out of any Product or Completed Operations. Product Product shall mean any product or thing (including containers packaging or labelling) sold, supplied, erected, repaired, altered, treated, installed, processed, grown, manufactured, assembled, tested, serviced, hired out, stored, transported or distributed by the Insured including any container thereof (after such goods and/or products cease to be in the possession and/or under the control of the Insured) in the course the [sic] Insured's business in or from Territorial Limits, including liability arising out the Competition and Consumer Act (2010) or similar legislation. 358 In the policy schedule, "Insured" was relevantly defined to include Icon and other members of the Icon Group as well as sub-contractors, manufacturers and suppliers. 359 In the policy schedule (read with the definitions) "Insured's Business" was also defined as follows: Principally, Builders, engineers, construction contractors, project managers, construction managers, property developers, plant & equipment owners, operators and hirers; property owners & occupiers; lessees; lessors and all other incidental activities thereof. 360 The exclusions (of which there were 17 in the QBE policy) relevantly included exclusions 5 and 6.2 as follows: The Insurer(s) shall not provide indemnity for the following unless stated to the contrary or qualified to the contrary elsewhere:- […] 5. liability for Property Damage to any products where such damage is directly caused by a fault or defect in such Products; but this Exclusion shall be interpreted to apply with respect to damage to that part and only that part of such product to which the damage is directly attributable; 6. liability for the loss of use of tangible property which has not been physically damaged or destroyed resulting from: […] 6.2 the failure of any Product to meet the level of performance, quality, fitness or durability expressly or impliedly warranted or represented by the Insured but this exclusion does not apply to loss of use or other tangible property directly or indirectly caused by, arising out of or in any way connected with or resulting from the sudden and accidental physical damage to or destruction of the Product after such Product has been put to use by any person or organisation other than the Insured.

[50]

Relevant principles as to construction 361 At J[53]-[63], the primary judge set out the relevant general principles concerning the process of construing insurance contracts. We have already discussed the primary judge's identification of the relevant principles and will refer to them later in our reasons to the extent they are relevant.

[51]

The text of the definition of "Product" and the ordinary meaning of the words 362 At J[302], the primary judge found that the Opal Tower and its component parts plainly satisfied the text of the definition on an ordinary reading of the words "product" and "thing". 363 At J[295], the primary judge noted the first noun meanings of "product" ("a thing produced by any action or operation, or by labour") and "thing" ("a material object without life or consciousness; an inanimate object") as set out in the Macquarie Dictionary (7th ed, 2017) and relied upon by QBE. The primary judge at J[302] found that the Opal Tower clearly fell within the ordinary meaning of "product", and noted that a "thing" was "hardly a narrow conception". 364 The primary judge noted that the policy definition of "Product" qualified the ordinary meaning of those words by requiring the product or thing to be dealt with in the manner of one of the listed past participles. 365 Earlier in the reasons, at J[287]-[290], the primary judge summarised the evidence of Mr Clunie and Mr Coombes in relation to the nature of Icon's business and manner in which the Opal Tower was constructed as follows: 287. Icon called two witnesses who were employed by Icon at the relevant times: Michael Clunie, a Site Manager who worked on the Project, and Jason Coombes, Icon's Commercial Manager. Icon sought to rely upon their evidence to justify the conclusion that the Opal Tower and each of its relevant component parts were Products within the meaning of the QBE Policy. 288. Mr Coombes gave evidence that Icon is in the business of designing, constructing and delivering buildings. He deposed that when Icon is engaged, it supplies to its clients a completed building which it constructs and erects on the developer's land. That work includes sub-contracting various works packages to third party sub-contractors. It was said that Icon arranges for all of the materials and component parts to be manufactured in accordance with the requirements of the contract, supplied to the site and erected and installed into the building at the site. Icon was also said to be responsible for testing the work under the contract to ensure it complies with the contract, and repairing any defects. 289. Mr Clunie gave evidence of the manner of constructing, erecting and installing the Opal Tower and its various component parts, and the concrete structure of the Opal Tower more generally. He also gave background evidence of the Incident and the resulting evacuation. He said the structural works at the Opal Tower were a separate package and stage of the works, separate and distinct from other packages and stages. The concrete structure of the Opal Tower was said to consist of various elements, including the columns, slabs, precast panels, reinforced concrete walls and hob beams, which were separately manufactured, assembled and installed by various sub-contractors. 290. As noted above, neither Mr Clunie or Mr Coombes were challenged and I accept their evidence. 366 The primary judge found at J[302] that the list of words (with particular regard to the words "supplied", "installed", "manufactured" and "erected") could "easily" accommodate the Opal Tower and its component parts. The primary judge held: …Icon is a construction company. Such companies erect buildings, and in so doing they supply to their clients a completed building, which involves it installing many components which have been manufactured by a number of different sub-contractors. The absence of the words "built" or "constructed" are therefore of no moment… 367 At J[303], by reference to the listed past participles, the primary judge rejected QBE's submission that the only relevant "thing" that Icon would be expected to supply is a thing adjunct to the construction of a building. In the context of an insurance policy issued to a construction company which delivers large-scale building products, the primary judge considered it difficult to see how such an adjunct might be, for example, "erected" in the ordinary sense of that term. 368 At J[304], the primary judge then rejected QBE's submission that reference in the definition to the Competition and Consumer Act 2010 (Cth) (CCA) and "similar legislation" suggested that the parties treat the expression "Product" as meaning only goods the subject of obligations and liabilities under the CCA, or things that are acquired by consumers. In doing so, the primary judge found that the use of the word "including" before the reference to the CCA illustrated that goods that may be covered by the CCA are a species of the things (rather than all the things) that may fall within the definition of "Product".

[52]

Context of the QBE policy as a whole 369 There were two key aspects to the primary judge's consideration of the context of the QBE policy as a whole: the distinction between a "Product" and "Completed Operations", and the operation of the exclusions.

[53]

The distinction between "Product" and "Completed Operations" 370 At J[305], the primary judge accepted that "Product" and "Completed Operations" were distinct concepts in the QBE policy, and noted QBE's submission that the distinction between "Product" and "Completed Operations" was illustrated by the use of "and/or" in cl 1.2 (which refers to the defined term "Products Liability and/or Completed Operations"). 371 However, the primary judge found this distinction could be reconciled with Icon's construction of the definition of "Product", and did not accept that Icon's construction rendered the definition of "Completed Operations" redundant. 372 Instead, the primary judge made the following determinative conclusion in respect of the purpose of the definition of "Completed Operations" at J[305]: …Completed Operations is defined to excise construction contracts for which the defects liability has expired. This explains why the definition of Construction Operations is couched in terms of the "contract" for such operations, not the resultant object created by the performance of such a contract. Accordingly, it does not render redundant the definition of Construction Operations to construe the meaning of Product to include the Opal Tower or its constituent parts. 373 Having regard to the primary judge's reasons, and the text of the definition of "Completed Operations", we accept Icon's submission that there is a slip in the first sentence of the extracted passage. It should read as follows: …Completed Operations is defined to excise construction contracts for which the defects liability has not expired… 374 We also accept QBE's oral submission that there is a slip in the final sentence of the extracted passage, which should read as follows: Accordingly, it does not render redundant the definition of Completed Operations to construe the meaning of Product to include the Opal Tower or its constituent parts. 375 In these reasons at J[305] in respect of the purpose of the definition of "Completed Operations", it is implicit that the primary judge considered that a contract itself (e.g. the Opal Tower Contract) would not be a "Product" for the purpose of the QBE policy but would be a "Completed Operation" if the defects liability period had expired. That is, the work left for the definition of "Completed Operations" to do relates to contracts for completed buildings where the defects liability has expired, even though there is overlap between "Completed Operations" and "Product" in respect of the resultant objects of those contracts. This is also evident in the primary judge's approach to the operation of the exclusions in the policy at J[306] which we will address below.

[54]

The exclusions 376 QBE submitted that to interpret the definition of "Product" to include a building or its component parts would have the consequence that the exclusions in relation to "Product" (specifically, exclusions 5 and 6.2) would substantially confine the cover available for "Completed Operations" in circumstances where the parties did not intend that to be the case: see J[299]. However, the primary judge found that these exclusions would not apply to a contract for the construction of tangible property and at J[306] held as follows (the emphasis being in the primary judge's reasons): …For the reasons outlined above, that the Opal Tower is to be considered a Product within the meaning of the QBE Policy does not mean that it is to be equated with a Construction Operation, as defined. Accordingly , read fairly, it would not make sense for Exclusion 5, for example, to apply to a "contract for the construction" of tangible property, and further that that exclusion would only to [sic] apply to the extent that the damage is caused to a part of such a "contract". 377 Having thus found that the exclusions would not apply to construction contracts for tangible property, the primary judge found at J[306] that Icon's construction of "Product" was not inconsistent with the exclusions in the QBE policy.

[55]

The gap in policy cover on QBE's construction 378 Having expressed views in favour of Icon's construction of "Product" on the basis of the plain meaning of the text which would mean that cover was available for contracts completed during the policy period when the defects liability period had not yet expired, the primary judge then noted that QBE's alternative construction would lead to a "somewhat odd result". The primary judge said at J[313]: Although it is not determinative, if QBE's construction were correct it might be thought to be [a] somewhat odd result. In circumstances where contracts commenced during the policy period would be covered during their defects liability period, and projects completed, but not necessarily commenced, during the policy period would be covered if the defects period had expired, it seems contrary to the parties' intent that there would be no cover for damage occurring on projects that had been completed during the policy period but for which the defects liability period had not expired. 379 Conveniently restated, a gap was said to arise on QBE's construction of the policy as: (a) contracts commenced during the period of insurance would be covered in the defects liability period; (b) contracts completed during the period of insurance would be covered after the defects liability period; but (c) contracts completed during the period of insurance would not be covered in the defects liability period. In respect of (a) above (which relates to the first half of the second sentence in J[313]), we understand this conclusion to have relied on conditions 8 and 15 (read with cl 1.1 of the insuring clause) as it does not arise from the plain language of cl 1.1 of the insuring clause itself (or, for that matter, cl 1.2 when read with the definition of "Completed Operations"). That is, when cl 1.1 of the insuring clause and conditions 8 and 15 are read together, the reference to "Construction Period" (cl 1.1) meant the construction period for contracts commenced during the period of insurance. This reading of the primary judge's decision is consistent with his earlier conclusions in respect of contracts commencing and runoff provisions in the Liberty policy. 380 At J[313], the primary judge found that such a gap would seem to be contrary to the parties' intention. It is somewhat unclear what evidence was relied upon to reach this conclusion, in particular whether, in making this finding, the primary judge had regard to the parties' understanding as to the terms of cover under the Liberty policy.

[56]

Other decisions as to the meaning of "product" 381 In favouring Icon's construction of the definition of "Product", the primary judge considered his conclusion to be strengthened by the decision of Hargrave J in Metricon Homes Pty Ltd v Great Lakes Insurance SE [2017] VSC 749: see J[294], [309], [311]-[312]. In Metricon, Hargrave J determined at [131] that "the definition of Insured Products should be given its ordinary meaning, and…in the context of the policy as a whole, the house [constructed by the insured builder], and each of its component parts, was an Insured Product". 382 At J[311], the primary judge noted the similarity between the definitions of "Product" (or "Insured Product"), "Completed Operations" and "Construction Operations" in the QBE policy and the policy considered in Metricon. The primary judge accepted that Hargrave J's conclusion was obiter and that each contract must be construed according to its own terms, but also observed that the same words used in similar policies should be given a consistent interpretation where possible: citing Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 at 394 (Kirby P); McCann v Switzerland Insurance [2000] HCA 65; 203 CLR 579 at 601 (Kirby J). 383 At J[307]-[312], the primary judge rejected QBE's reliance upon the decisions in Aspen Insurance UK Ltd v Adana Construction Ltd [2015] EWCA Civ 176 and Bigby v Kondra [2017] QSC 37. In doing so, the primary judge: (a) like Hargrave J in Metricon (at [126]-[127]), did not agree that a product is necessarily something which is a "tangible and moveable" item as opposed to something which "only came into existence to form part of the land on which it was created"; (b) noted that the interpretation of "product" in Aspen could not be determinative of "Product" in the QBE policy, particularly where the definition in the QBE policy was "of such broad scope to encompass 'any product or thing'"; (c) found Bigby to be of limited assistance as it involved different textual indications which had no analogue in the QBE policy and there was no analysis of the reasoning in Aspen, (which it adopted); and (d) noted that Aspen and Bigby (as well as Metricon) concerned the proper construction of the term "product" for the purposes of an exclusion clause (not an insuring clause) which would ordinarily support a narrower interpretation.

[57]

The declarations 384 Having determined that the Opal Tower and its component parts were a "Product" within the meaning of the QBE policy, the primary judge made a declaration to this effect ('first declaration'), and also declared that the incident was in connection with a "Product" of Icon and its related entities such that the incident reflected or was the result of an "Occurrence in connection with the Insured's Product Liability" within the meaning of cl 1.2 of the insuring clause ('second declaration').

[58]

The appeal 385 On 16 November 2020, QBE filed a notice of appeal in respect of the primary judge's decision. QBE contended that the primary judge erred in law in making the findings that underpin the first and second declarations. Ground 1 of the appeal was in the following terms: 1. The primary judge erred in law in finding at J[302] that the: a. Opal Tower; b. each of the: i. Level 10 Hob; ii. Level 10 Slab; iii. Level 4 Hobs; iv. Level 4 Floor Slab; v. Level 16 Walls; and c. concrete structure of the Opal Tower comprising columns, slabs, precast panels, reinforced concrete walls and hob beams, were each a "Product" within the meaning of the policy of insurance issued by the First Respondent in favour of the Appellant and related entities entitled "Chase Underwriting Third Party Liability Policy" for the policy period 20 September 2018 to 31 December 2018 (2018 QBE Policy). 386 Ground 2 of the appeal related to the findings underpinning the second declaration. Icon has since conceded that the primary judge erred in making the second declaration as it was beyond the scope of the relief sought by Icon in its third further amended originating application. Ground 2 is thus no longer pressed by QBE and the parties have asked the Court to set aside by consent the primary judge's order making the second declaration, which we will do.

[59]

The text of the definition of "Product" and the ordinary meaning of the words 387 The first issue is whether the primary judge was correct to find that the plain text of the definition, assisted by the ordinary meaning of the words "product" and "thing", easily accommodated the Opal Tower and its component parts. 388 QBE has focused on the primary judge's approach to the qualifying past participles in the definition of "Product" and, in particular, the absence of the words "built" or "constructed". QBE submitted that in ordinary language, Icon (as a builder) "builds" a building or (as a construction contractor or construction manager) "constructs" a building, and noted that the "Insured's Business" as defined in the policy was construction and building. In these circumstances, QBE asked why were the words "built" or "constructed" not included in the definition if "Product" was intended to be construed in the way that the primary judge found? 389 QBE submitted that the clear omission of the words "built" or "constructed" in the definition suggested that "Product" had been deliberately defined so as to exclude a whole building. QBE submitted that, with the exception of "erected", none of the specified activities was apt to describe the construction of an apartment building or other complex structure. QBE conceded that it is reasonably common use of language to speak, for example, of an office tower being "erected", but said that it is not a particular apt description of the process involved in creating the fabric of such a building. Placing reinforcement, pouring concrete, laying bricks or fixing concrete panel to structural beams are processes of construction or fabrication which are not aptly described as "erected" as compared to, for example, the erection of a public or garden statute, a children's climbing frame, falsework such as scaffolding, props or bracing, or signage. 390 There is some force in this submission and the analysis shows that the plain meaning of the definition of "Product" is not clear. As the primary judge found at J[302] (applying the other listed past participles in the definition of "Product"), it is true that construction companies "erect" buildings and in doing so "supply" their clients with a completed building, which involves "installing" many components which have been "manufactured" by a number of different sub-contractors. However, it seems to us that "built" or "constructed" are the most apt descriptors of what a construction company does in relation to a building, although they are not the only available terms to describe the building and construction process. 391 We also note that "Insured" was broadly defined in the policy to include Icon, other members of the Icon Group, as well as sub-contractors, manufacturers and suppliers. "Insured's Business" is similarly broadly defined and includes, for example, "construction contractors… and all other incidental activities thereof." In oral submissions, consistently with the evidence of Mr Clunie, Senior Counsel for Icon noted the possibility that a sub-contractor - for example, one who supplied and erected the walls on Level 16 of the Opal Tower then exited the site and left the walls under Icon's control - would make a claim for indemnity under the policy. 392 As QBE submitted, the definition included a wide range of activities and was not drafted in a way that seeks to reflect the likely scope of Icon's activities. For example, Icon was unlikely to grow products or things in the course of its business yet the word "grown" is included. It follows that the omission of "built" or "constructed" in a definition containing seventeen other verbs is significant, albeit not determinative. 393 Icon submitted that if there had been such an intention to exclude a whole building, then one would expect to see a clear statement to that effect. We do not accept this submission. We do accept that the words used in the definition of "Product" are wide enough to include the Opal Tower and its component parts, each of which was a thing that was "supplied", "erected", "installed" or "manufactured" by Icon (or its sub-contractors, manufacturers or suppliers). However, as we have observed, we consider that the more obvious terminology to be used in relation to a building and construction process are the words "built" or "constructed". Therefore, we are not in a position where the definition of "Product" provides a perfectly clear meaning, and the context and purpose of the policy becomes important to consider.

[60]

Context of the QBE policy as a whole 394 Even if the text of the definition of "Product" and the ordinary meaning of the words "product" and "thing" are apparently broad enough to encompass the Opal Tower and its component parts, it is difficult to reconcile the primary judge's construction of "Product" with the operation of the QBE policy as a whole. 395 It is convenient here to briefly mention the recent case of HDI Global Speciality SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296, where Meagher JA and Ball J made the following observations about the importance of construing terms in the context of the entire policy: 22. The language is construed according to its natural and ordinary meaning: Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 at 510-511. As Lord Mustill said in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 384 "the inquiry will start, and usually finish, by asking what is the ordinary meaning of the words used". Where the words are unambiguous, they cannot be ignored simply to reach a result that is apparently more commercially convenient: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109; [1973] HCA 36. 23. Nevertheless, as Mason J emphasised in Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 23 at 348, construing a written contract requires more than just assigning the words their ordinary meaning. The Court must consider the "circumstances which the document addresses, and the objects which it is intended to secure": McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 per Gleeson CJ at [22]; Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [15], [16]; Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47]. That the court should know and have regard to the commercial purpose and object of the contract "presupposes knowledge of the genesis of the transaction, the background, the context [and] the market in which the parties are operating": per Lord Wilberforce in Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995-996. […] 27. The objective theory does not require or permit the words of a contract to be given a meaning that a reasonable person knowing all relevant facts would give them. Rather, the theory requires the court to consider what meaning a reasonable person in the position of the parties would give those words. That requires the court to consider what the parties may be taken to have known. In this context, the reference in Maggbury to facts "which would reasonably have been available to the parties" does not describe a species of constructive notice. As Allsop P (Giles and Macfarlan JJA agreeing) explained in QBE Insurance Australia Ltd v Vasic [2010] NSWCA 166 at [35]: Constructive notice implies a degree of enquiry by reference to some external standard. Just because something is available to be found does not make it relevant, if the parties did not know of it. The reasonable person may be taken to know of things that go beyond those that the parties thought to be important or those to which there was actual subjective advertence by the parties. Further, the circumstances may include such things as the legal context to the transaction, especially if a market is involved. Nevertheless, the scope of the relevant material is necessarily bounded by the objective task of the reasonable person giving meaning to the words used by the parties in the circumstances in which the contract came to be written, by reference to what the parties knew in the sense stated by Lord Wilberforce in Reardon Smith, by Mason J in Codelfa and by the High Court in the various cases since Codelfa. 28. This approach focuses attention on the words used, and not on the subjective intentions and beliefs of the parties as to what they have agreed. But it does not do so at the expense of ignoring the fact that what the court is seeking to do is ascertain what the parties agreed.

[61]

The distinction between "Product" and "Completed Operations" 396 The first difficulty relates to the operation of the concepts of "Product" and "Completed Operations" in the policy. QBE submitted that the insuring clause distinguished between risks from "Products" and "Completed Operations" (and "Construction Operations"). The risk of liability for "Completed Operations" that QBE said it assumed under the policy was that arising from construction projects that were complete, in the sense that the building had been handed over and Icon's responsibility arising from contractual terms imposing a defects liability period had expired. Contrary to this stated intention, on the primary judge's construction of the policy, any building would be a "Product" and QBE would thereby assume risk of liability in respect of it regardless of the stage of completion and whether the defects liability period had expired. 397 The distinction between "Product" and "Completed Operations" was said by QBE to reflect the parties' agreement to treat separately the risk of liability associated with completed buildings and the risk of liability associated with the supply of "Products" (other than completed buildings) by Icon in the course of its activities as a building contractor. QBE said that it agreed to provide indemnity in connection with claims of either kind arising in the period of insurance (ie claims in respect of completed buildings or "Products") but did not agree to provide indemnity of the same scope. 398 The commercial basis for that distinction was said to be at the heart of the claim that was successfully pursued by Icon against Liberty, being the claim we would uphold (on a different basis to the primary judge) for the reasons set out above. Icon's case against Liberty was that at all material times the parties understood and intended that cover was being written on a contracts commencing basis such that cover would be available under the policy on foot at the time a construction project was commenced for liability in connection with that project occurring at any time prior to the expiry of the defects liability period, and that cover to that effect was indeed secured. 399 The cover under cl 1.2 of the QBE policy was said by QBE to be for something quite different. It was confined to liability for damage occurring during the period of insurance (20 September 2018 to 31 December 2018) for projects that were complete (in the sense that the defects liability period had expired) and for product liability. Cover under cl 1.2 was thus said to be an adjunct to the contracts commencing cover that applied under the Liberty policy regardless of when the project was undertaken or when the product was supplied (or "sold", "erected" or "installed", to use some of the listed past participles in the definition of "Product" in the QBE policy). 400 QBE submitted that it had been open to the parties to contract on a basis that provided identical cover for liability associated with completed buildings (in the sense described above) and "Products"; and, in that event, there would be no purpose to be served in separately defining those two concepts. But the fact is that they were separately defined, which (as the trial judge accepted at J[305]) demonstrates that they were separate concepts. 401 Turning to the words used in the QBE policy: on the primary judge's construction of "Product", the definition of "Completed Operations" is said to be redundant. QBE submitted that the primary judge's finding that the purpose of the definition was to "excise construction contracts for which the defects liability has [not] expired" (emphasis added) ought not to be accepted. 402 As we have already observed, the primary judge emphasised that the definition of "Construction Operations" was "couched in terms of the 'contract' for such operations, not the resultant object created by the performance of such a contract": at J[305]. However, the critical point (as submitted by QBE) is that where a policy provides indemnity for personal injury or property damage connected to activities associated with the business of the insured (i.e. Icon's construction business), there does not appear to be any meaningful distinction to be drawn between personal injury or property damage arising from a contract and such injury or damage arising from the product of a contract or the resultant object of the performance of a contract. 403 Icon submitted that, whilst there may be some overlap between "Products Liability and/or Completed Operations" within the meaning of cl 1.2 of the insuring clause, the overlap is by no means complete. In this regard, Icon pointed to the various conditions that must be met for a completed building to be a "Completed Operation" under the policy: "Construction Operations" are defined to mean "all contracts for the construction…of…tangible property…[for] which the Insured is or was contractually obligated to effect insurance"; "Completed Operations" are defined to mean "Construction Operations" but only where they "have been completed, handed over to the Principal/Owner and where any maintenance/defects liability periods have expired". 404 In contrast, Icon said that the products liability cover in the QBE policy was in respect of things meeting the definition of "Product" irrespective of whether or not any applicable defects liability period had expired and regardless of whether or not there was a contractual obligation to effect insurance, but only where such "goods and/or products cease to be in the possession and/or under the control of the Insured". 405 Icon submitted that there was a meaningful distinction between "Product" and "Completed Operations" and that the latter definition was not redundant. It said that on the primary judge's construction, so long as a contract in respect of which Icon was "contractually obligated to effect insurance" was beyond the defects liability period, Icon would obtain cover in respect of the contract as a "Completed Operation" regardless of whether the loss arose from something which met the definition of a "Product". 406 Icon then submitted that there is nothing surprising about the fact that there may be some overlap between the two concepts, returning to the composite nature of the phrase "Products Liability and/or Completed Operations" and the use of "and" in that defined term, which it said clearly suggested that the two concepts are not mutually exclusive. Icon noted that the "Limit of Liability" for the two types of cover was the same and submitted that, properly construed, the intent of cl 1.2 of the insuring clause was to ensure that Icon was covered for third party liability risks in respect of its work product once that work product has passed out of Icon's control. That is, regardless of whether the work product was under a contract containing a contractual insurance obligation for which the defects liability has expired or otherwise fell within the broad definition of "Product". 407 However, we accept QBE's submission that, where a policy provides indemnity for personal injury or property damage which is connected to activities associated with the business of the insured, there does not appear to be any meaningful distinction to be drawn between personal injury or property damage arising from a contract or the resultant object of the performance of a contract. Once this is accepted, then any apparent work to be done by the definition of "Completed Operations" (for example, as some species of contract that operates independently of the broadly defined "Product") falls away. 408 If a completed building is a "Product" for the purposes of the Policy, then the definition of "Completed Operations" does not serve to confine the scope of cover for completed buildings, and claims arising in connection with completed buildings will be covered regardless of whether the defects liability has expired. 409 We should note that, in respect of the defined term "Products Liability and/or Completed Operations", both QBE and Icon have made submissions about the use of "and/or". However, we do not consider the use of this grammatical tool to be material to our construction of the QBE policy as a whole. 410 For these reasons, we respectfully consider the primary judge erred in finding that the definition of "Completed Operations" was not made redundant by his construction of the definition of "Product". This error then led the primary judge to dismiss the significance of the distinct concepts of "Completed Operations" and "Products". As we will explain, this reasoning flowed through to his analysis of other contextual considerations in the body of the policy - the exclusions.

[62]

The exclusions 411 As we have already observed, there are a number of exclusions in the QBE Policy, including exclusions 5 and 6.2 that apply specifically in respect of "Products". These exclusions relate to damage directly caused by a fault or defect in the "Product", and loss of use of tangible property resulting from the failure of a "Product" to meet warranted levels of performance, quality, fitness or durability. Conversely, there are no exclusions that apply specifically in respect of "Completed Operations" or "Construction Operations" or that expressly excise from the scope of cover under the QBE policy damage to defective buildings or parts of buildings. 412 QBE submitted that if a completed building or a component of a completed building is a "Product" then the scope of cover in connection with "Completed Operations" is confined by operation of these exclusions, an outcome which was said to be contrary to the parties' clear and evident intent. 413 Icon seemed to accept that the exclusions would apply to "Completed Operations", contrary to the primary judge's findings at J[306], but highlighted the following qualifications (or "write backs") in the exclusions (emphasis being in Icon's written submissions): Exclusion 5: "liability for Property Damage to any Products where such damage is directly caused by a fault or defect in such Products"; but "this Exclusion shall be interpreted to apply with respect to damage to that part and only that part of such product to which the damage is directly attributable"; Exclusion 6: "liability for 'the loss of use of tangible property which has not been physically damaged or destroyed' resulting from: […]6.2 'the failure of any Product to meet the level of performance, quality, fitness or durability expressly or impliedly warranted or represented by the Insured' but 'this exclusion does not apply to loss of use of other tangible property directly or indirectly caused by, arising out of or in any way connected with or resulting from the sudden and accidental physical damage to or destruction of the Product after such Product has been put to use by any person or organisation other than the Insured'". 414 As we have already noted above, the primary judge found that the exclusions would not apply to a contract. Again, this analysis relies on a distinction between a contract (one that is, on the primary judge's view, a "Completed Operation" but not a "Product") and a completed building created pursuant to a contract (one that is, on the primary judge's view, a "Completed Operation" if the defects liability period has expired, and a "Product" regardless of whether the defects liability period has expired). 415 QBE submitted (and we accept) that this narrow approach to the operation of, for example, exclusion 5 is difficult to accept. Clause 1.2 of the insuring clause relevantly provided for liability as a result of an "Occurrence" in connection with "Completed Operations". If the word "Product" is treated as extending to completed buildings then, where liability in respect of a "Completed Operation" is in connection with damage to defective building work, we do not see how the exclusions could not apply. The reference to "contracts" in the definition of "Construction Operations" does not serve to quarantine "Completed Operations" from the operation of exclusions 5 and 6.2 if the completed building is a "Product". 416 The potential breadth of the exclusion was illustrated by Senior Counsel for QBE at the hearing by reference to a hypothetical in the context of this case: if Icon has spent $17 million in property rectification costs, it might have difficulty recovering these costs if part of the building (such as the hobs) was defective. However, having regard to Icon's submissions and the existence of the qualifications to exclusions 5 and 6.2 (which are referred to by Icon as "write backs"), in that situation it may be open to Icon to argue that the exclusions do not apply (e.g. because the damage was not directly attributable to a defect for the purpose of exclusion 5 or resulted from sudden and accidental physical damage for the purpose of exclusion 6.2). 417 We have reached a middle ground in respect of the effect of the exclusions. We accept that, on the primary judge's construction of "Product", the exclusions would apply to "Completed Operations" that are also "Products" (i.e. the resultant object of a construction contract where the defects liability has expired) and in this regard, a broader construction of "Product" (such as that found by the primary judge) does extend the scope of the exclusions. However, we accept that the qualifications to the exclusions do ensure that the cover in cl 1.2 of the insuring clause retains some meaningful scope, thereby weakening QBE's contention that "Product" should be construed narrowly to avoid unduly limiting the insuring clause by operation of the exclusions. 418 Returning to the context of the QBE policy as a whole, the fact remains that cover for "Completed Operations" would be reduced by operation of exclusions 5 and 6.2 if "Completed Operations" are also "Products". The parties have introduced these separate concepts and have agreed upon a different scope of cover for each of them. When regard is had to the exclusions in the context of the policy as a whole, it is evident that the parties did not intend the definition of "Products" to extend to "Completed Operations", thereby eroding the distinction between them.

[63]

The gap in policy cover on QBE's construction 419 We will now deal with whether the gap in cover arising from QBE's construction of the policy is anomalous (or "odd" as the primary judge found at J[313]) and contrary to the parties' commercial intentions. 420 Icon contended (consistently with the primary judge's finding at J[313]) that it would be an odd result and contrary to the evident intention of the parties if there was no cover under the QBE policy for projects that had been completed and handed over but for which the maintenance or defects liability periods had not expired. 421 Icon said this anomalous gap supported the conclusion that QBE's construction should not be preferred, citing Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36; 129 CLR 99 at 109 (Gibbs J) and Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314 (Kirby P). We have already made reference to Australian Broadcasting Commission, which was referred to in the above passages (at [395]) from HDI Global Speciality SE. Nevertheless, it is worth noting that in Australian Broadcasting Commission, Gibbs J (as his Honour then was) dissented from the majority but uncontroversially said at 109: It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, "even though the construction adopted is not the most obvious, or the most grammatically accurate"…. 422 In Hide & Skin Trading, a decision of the New South Wales Court of Appeal, Kirby P delivered a separate judgment and held (at 313-314): Between two such substantial businesses, there are sound reasons of principle and policy for determining their respective rights and duties, if at all possible, by reference to the written terms by which they expressed those rights and duties. No other approach is as likely to command general acceptance in the commercial community. No other approach is as efficient in the containment of litigation. None is so effective in conserving the economic and entrepreneurial decisions which lie behind contract law to business people rather than lawyers. But language, including that used in commercial agreements, is often ambiguous. It may be so even in agreements between substantial parties which are well advised by lawyers. The ambiguities may arise from a deliberate decision to keep the terms of the agreement between the parties vague, because they are difficult to define and, it is hoped there will be no occasion for disagreement. It may be so because the parties, and those advising them, do not foresee the infinite variety of circumstances which later arise calling for resolution by reference to their agreement. Or it may be so for no better reason than that the inherent contradictions that lie in the words of the agreement between the parties were not recognised at the time those words were agreed to. It then falls to the parties in the first instance, and a court ultimately, to give meaning to those words. Whoever may be the parties to the agreement, it is the fundamental rule, that a court should give the words of a written agreement the natural meaning that they bear. Subject to that rule, in giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense or is shown to be commercially inconvenient. This is because courts will infer that commercial parties would not themselves normally agree in such a way. It is true that the construction of the agreement urged by the appellant has the inconvenience to which Cole J referred. So construed, the agreement would mean that the liability of the respondent could extend well beyond the term of the agreement between the parties. At first glance, such an economically disadvantageous assumption of obligations would seem unlikely. It may be inferred that, for the proper control of its own financial position, the respondent would ordinarily wish to be in a position to determine the extent of the liability to provide trade finance at any given time. Subject to the requirements of notice for the termination of its facility, it should therefore be able to control, with precision, the date after which further liability under the facility would be terminated. 423 Icon sought to sustain that characterisation by suggesting that the terms of Liberty policy and the parties' understanding as to the terms of that cover should be ignored. As we have already noted, Icon said it was not open to QBE to refer to the terms of the Liberty policy or the intentions of Liberty and Icon in relation to the operation and effect of the Liberty policy, and submitted that these matters were wholly irrelevant to the proper construction of the QBE policy. 424 We accept that there is no evidence to warrant treating the entry into the Liberty policy and the material assumption or intentions of Icon and Liberty as legitimate context in which to construe the QBE policy. Nevertheless, the suggestion that the scope of the cover under the QBE policy is odd, anomalous or commercially inconvenient is founded on assumptions without proper context. 425 There would only be a gap in cover from the acceptance of QBE's construction, if one assumes that contracts commenced before the beginning of the period of insurance would not be covered by any other insurer during the defects liability period. That assumption may or may not be correct. Whether or not projects being contracts commenced before the period of insurance were covered during their defects liability periods would depend upon whether an earlier contracts commencing insurance policy or policies covered Icon up to the expiry of the defects liability periods. 426 In Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13; 267 CLR 514, the majority of the High Court (Kiefel CJ, Gageler, Nettle and Gordon JJ, with whom Edelman J agreed on this point) held at 641 [26]: As the Full Court concluded: "[c]ontext will almost always tell one more about the objectively intended reach of such phrases than textual comparison of words of a largely relational character". There may be causes which have to be resolved largely, if not entirely, by reference to the language of the arbitral clause in question. But this is not such a case. The background to and the purposes of the Deeds, as reflected in their terms, point clearly to arbitral clauses of wide coverage with respect to what was to be the subject of confidential processes of dispute resolution. (Footnotes omitted.) 427 It is inappropriate and unjustified to assume that there would be no such earlier entered contracts commencing cover that would make the "gap" odd, anomalous or commercially inconvenient. There may or there may not have been such earlier contracts. Such earlier contracts would also have to be mutually known to Icon and QBE for their existence to assist in any conclusion that the "gap" created an oddity, anomaly or commercial inconvenience. One cannot make any assumption one way or another. 428 If, as Mr Bovington made clear, annual contracts commencing cover was a common form of cover and that such cover commonly extended up to the end of the defects liability period, there was no oddity in insuring cl 1.2 not duplicating cover that one could not assume was absent. The obtaining of such cover was a circumstance that was for Icon and QBE to consider in the light of any mutually known context. 429 The lack of oddity in the cover can be illustrated by the facts in this case. Icon's case against Liberty was premised on there being a mutual intention expressed in the terms of the Liberty policy either as it stood or as rectified in the manner sought by Icon, that cover would be available under each annual contracts commencing policy for liability arising from contracts commenced during the policy period, whether or not that liability arose from an occurrence during the policy period. Icon's case below was that Icon and Liberty understood and intended that cover was being written on a "contracts commencing" basis. Icon sought cover from QBE for the period from September to December 2018 on the understanding that cover had already been placed, under prior policies, for any liability for property damage or personal injury that might arise in connection with projects then on hand, up to the expiry of the defects liability period. 430 We do not say that this mutual intention and what Icon sought from QBE were somehow legitimate contextual material for construing the QBE policy. But existence of such matters illuminates why it is wrong to assume circumstances (without evidence) that there was no cover during the defects liability period in respect of contracts commenced before the period of insurance as part of reasoning to support a conclusion that the cover offered by QBE and the "gap" was odd, anomalous or created commercial inconvenience.

[64]

Other decisions as to the meaning of "product" 431 Icon submitted that the primary judge was correct to find that Metricon provided assistance in identifying the proper construction of the definition of "Product" in the QBE policy. However, as the primary judge observed himself, the extent of that assistance can only be regarded as very modest. We note in particular that the relevant observations in Metricon were obiter, that the definition of "Insured's Products" included the verb "constructed", and that Hargrave J's observations were based upon other contextual features that do not arise from the terms of the QBE policy.

[65]

The component parts? 432 There is an outstanding question as to whether a different conclusion could be reached in respect of the entire building and its component parts. In its third further amended originating application Icon sought a declaration that "the Opal Tower; and/or" its various component parts was a "Product" within the meaning of the QBE policy, although the primary judge made the first declaration using "and". 433 Mr Coombes in his evidence (referred to above at [365]) addressed the elements of the concrete structure of the Opal Tower which were separately manufactured, assembled and installed by various sub-contractors. Mr Coombes gave evidence that: The Icon Group is in the business of designing, constructing, and delivering buildings. When we are engaged, we supply to the client a completed building which we construct and erect on the developer's land. This includes sub-contracting various works packages to third party sub-contractors. Icon arranges for all of the materials and component parts to be manufactured in accordance with the requirements of the contract, supplied to the site, and erected and installed into the building at the site. Icon is also responsible for testing the work under the contract to ensure it complies with the contract, and repairing any defects. 434 This issue rose again at the hearing of the appeal, at which time Senior Counsel for QBE was asked by the Court to confirm whether QBE's approach was "all or nothing": that is, whether building must be treated as a totality or the components can be looked at individually. QBE submitted that this was of no import: if there is a scope of cover for "Completed Operations" that is confined by the terms of the policy, then the scope is so confined for the building and for each and every part of it. We agree with this submission. In any event, whilst the third further amended originating application may have raised this issue, no real attention was given to it during the trial or in the appeal, and the parties in debating the question of the ambit of the definition of "Product" focused on the composite items of the building itself and its component parts. Further, as Senior Counsel for QBE pointed out, Icon entered into a contract to construct a building, and it is not a realistic approach to break down Icon's activities by reference to component parts that are eventually incorporated into the fabric of the structure of the building. 435 For these reasons, we would allow the appeal. The orders we would propose to make are: (1) The appeal be allowed. (2) Order 8 of the orders of the Court made on 26 October 2020 in VID781/2019 be set aside by consent. (3) Orders 4 and 7 of the orders of the Court made on 26 October 2020 in VID781/2019 be set aside and in lieu thereof it be ordered that: (a) the third further amended originating application by the applicant (Icon) as against the second respondent (QBE) be dismissed; and (b) Icon pay QBE's costs of the proceeding to be agreed or assessed. (4) Icon pay QBE's costs of the appeal as agreed or assessed. I certify that the preceding four hundred and thirty-five (435) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop and Justices Besanko and Middleton.

Parties

Applicant/Plaintiff:

Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets

Respondent/Defendant:

Icon Co

Legislation Cited (3)

Insurance Contracts Act 1984(Cth)

Evidence Act 1995(Cth)

Competition and Consumer Act 2010(Cth)

Cases Cited (63)

7,461 HDI Global Speciality SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280; 61 ATR 593 Jacob v Utah Construction and Engineering Pty Ltd [1966] HCA 67; 116 CLR 200 Johnson v American Home Assurance Company [1998] HCA 14; 192 CLR 266 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Lee v Lee [2019] HCA 28; 266 CLR 129 Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 McCann v Switzerland Insurance [2000] HCA 65; 203 CLR 579 Metricon Homes Pty Ltd v Great Lakes Insurance SE [2017] VSC 749 Miliangos v George French (Textiles) Ltd [1976] AC 443 Muriti v Prendergast [2005] NSWSC 281 Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd [1976] 1 WLR 989 Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13; 267 CLR 514 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 260 CLR 85 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) [1999] HCA 3; 160 ALR 588 Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166 SZGME v Minister for Immigration and Citizenship [2008] FCAFC 91; 168 FCR 487 Todd v Alterra at Lloyds Ltd [2016] FCAFC 15; 239 FCR 12 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; 165 CLR 107 Zhu v Treasurer (NSW) [2004] HCA 56; 218 CLR 530

[2017] QSC 37

[2017] VSC 749

[1999] HCA 3

[1986] HCA 32

[2018] VSC 2

[2019] VSCA 98

[2012] QSC 185

[2010] QSC 6

[2006] VSCA 128

[2015] VSCA 137

[2006] QCA 220

[1986] HCA 82

[2015] HCA 37

(1992) 35 NSWLR 390

(1990) 20 NSWLR 310

(1986) 6 NSWLR 390

(1973) 129 CLR 99

(2001) 50 NSWLR 679

(2003) 214 CLR 514

(2006) 15 VR 156

(1924) 35 CLR 355

(2015) 49 VR 402

(1982) 180 CLR 447

(1995) 41 NSWLR 329

(2019) 99 NSWLR 317

(2004) 218 CLR 471

(1959) 101 CLR 298

(1986) 161 CLR 500

(1982) 149 CLR 337

(2000) 203 CLR 579

(2005) 221 CLR 522

(2015) 256 CLR 104

AI Analysis

Outcomemixed

Disposition:

Cross-appeal allowed; Liberty appeal dismissed; QBE appeal allowed; declarations and orders made that Icon obtained run-off cover under Liberty condition 15 for the Opal Tower until at least 24 December 2018 and that the incident was an occurrence within the Liberty policy period; QBE policy does not respond; Liberty to pay Icon's costs.