(1) Unless stated otherwise in the Schedule, PART A of this policy shall indemnify the Building Owner under a contract entered into with the Contractor prior to commencement of this policy but after the retroactive date stated in the Schedule, on the terms and conditions of PART A of this policy.
This PART B Subclause (1) shall not apply to any work which, at the date the Contractor first becomes aware, or might reasonably be expected to have become aware, of some fact or circumstance which may give rise to a claim, is insured under another policy of insurance issued in compliance with the Act."
60 The cover under Part B is clearly separate and distinct from the Part A cover. Part B in no way operates as a limitation upon, or exclusion from, the Part A cover. If loss be suffered within the scope of the Part A cover read without reference to Part B, there is no warranty for limiting its scope by reference to Part B.
61 That can be demonstrated readily enough from the simple fact that Part B cover, which had not been sought in this present case, covers an entirely different situation. It applies where there has been a building contract entered into prior to the commencement of the policy but after what is described as "the retroactive date", that being here, as the schedule makes clear, 16 November 2001. The intention is evidently to provide a continuum of cover for a "claim made" policy such that, if such a contract were entered into after the retroactive date but before the commencement date of the policy giving rise to loss or damage of the kind covered by the policy, Part B provides run-off indemnity on a "claims made" basis.
62 As the appellant's building contract pre-dated the retroactive date, Part B does not address its circumstances. In my judgment, Part B does not by implication thereby preclude coverage for the appellant's "relevant contract" given that it was entered into during the "Period of Insurance" referred to in Part A.
63 There is however a difficulty in that interpretation which needs to be squarely faced arising from the terms of the Schedule to the Policy. Though what I consider the preferred interpretation accords with the objective intention for coverage to be given to such a contract, as evidenced by the quotation and as reinforced by the admission (see items 3(b) to 3(e) inclusive at Blue, 18), nonetheless the schedule identifies a different "Policy Period". The schedule, which precedes the policy itself, defines "Policy Period" as that "Commencing from 16 November 2001 to 16 November 2002 at 4pm". Moreover, the definition of "Policy Period" in the policy itself identifies it as "the period of the policy specified in the Schedule".
64 There is therefore an inconsistency between Part A with its reference to "Period of Insurance" and the schedule with its reference to "Policy Period". The question then becomes which prevails.
65 One strong indication that Part A is not to be read down by reference to the Policy Period is that not only is it self-contained with its own definition of "Period of Insurance" but the retroactive date is in fact the same as the commencement date, being in each case 16 November 2001. That strongly suggests that the schedule's reference to "Policy Period", if applicable at all, would have applied to Part B exclusively, though the identity of retroactive date and commencement date indicates that it could not apply to it either. That it was not intended to apply to Part A is further made clear by the notation in the schedule immediately after the stated retroactive date, namely "this policy shall ONLY provide 'Run-Off' under Part B if the retroactive date precedes the commencement date of the Policy Period". Moreover, the heading immediately above is "Retroactive Date Applicable to Part B". This reinforces an interpretation which renders the retroactive date irrelevant to Part A, with its own definition of "Period of Insurance".
66 To the extent there is an inconsistency between the schedule and Part A, it accords with well-settled principles of interpretation to give primacy to the operative provision of the policy, namely Part A. Therefore I would recognise that "where the different parts of an instrument are inconsistent, effect must be given to that part which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole, and that part which would defeat it must be rejected"; "Chitty on Contracts" (2004) at 12-078 and the authorities cited, in particular Walker v Giles (1848) 6 CB 662, 702; Love v Rowtor Steamship Co ltd [1916] 2 AC 527, 353; Sabah Flour and Feedmills Sdn. Bhd. v Comfez Ltd [1988] 2 Lloyd's Rep 18, AMP Financial Planning Pty Ltd v CGU Insurance Limited (2004) 13 ANZ Insurance Cases ¶61-624 at [120] citing Chitty as above.
67 The arguments ranged against this interpretation include reference to the certificates earlier referred to and in particular reference to the certificate pursuant to s92(1)(b) of the Act and Regulation 56. That certificate is stated to be only valid for a contract entered into by the builder between 16 November 2001 and 16 November 2002. Moreover the contractor's certificate of currency provides for a policy period by reference to that same period.
68 On the principles of interpretation earlier set out, this part of the factual matrix, though not irrelevant to resolving any ambiguity, if such there be, is but a secondary source for determining the proper interpretation of the contract; that latter proceeds by reference to text itself, the purpose of the policy and its genesis. While these secondary materials are consistent with the schedule, I do not consider that they render the sense of Part A to be other than its plain meaning in referring, as it does, to a "Period of Insurance" which does not preclude insurance applying to a contract pre-existing the policy.
69 Nor on current authority can subsequent events be taken into account in construing the policy contract. They here consist of Hignett-Knight, the building's insurance broker, subsequently recording a policy covering "all major residential building work for which a contract is entered into during the policy period". That record post-dates the policy whose date was 21 November 2001. To the extent that it might constitute an exception to the rule precluding subsequent conduct being admitted in evidence as an admission of fact or law (see, for example, Winks v W H Heck & Sons Pty Ltd [1986] 1 Qd R 226 at 233 and the authorities cited by Carter on Contract at 13-100 fn 28), I do not consider that it carries much weight. Ranged against it as an admission are the admissions set out at Blue, 18. I refer in particular to that in 3(b) as follows: "The builder obtained a policy of Home Warranty Insurance from Dexta for and on behalf of Allianz, on or about 16 November 2001 in respect of the building work to be carried out at Ms Taylor's property ("the Building Works") (para 10 Claim, 11 Defence)".
70 The respondent sought to argue that the words "in respect of" did not acknowledge that the contract covered that building work or at any rate did not acknowledge that coverage in circumstances where the building contract pre-dated the policy. That may be so, though the language comes pretty close to doing so. The most that could be said is that the admissions are in both directions, and so could not control the interpretation of the policy here even if admissible.
71 A further argument was put by the respondent to the effect that the interpretation put by the appellant would mean that a contract entered into five years earlier would be the subject of coverage under the policy should loss or damage arise of the description in the policy after its commencement. To this two things may be said. First, if that consequence be the result it is not necessarily unreasonable. Second, it may be that the contract should be construed as failing to extend to construction contracts not contemplated by the parties that pre-date the policy. Here of course the construction contract was clearly contemplated.
72 I do not therefore consider that any of these secondary matters should alter the interpretation which I consider correct, namely that the policy, properly construed, applied to the appellant's building contract.