Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Zurich Australian Insurance Limited v CIMIC Group Limited & Ors [2024] NSWCA 229 Hearing dates: 19-22 September 2023 Date of orders: 18 September 2024 Decision date: 18 September 2024 Before: White JA, Stern JA and Griffiths AJA Decision: (1) Zurich Appeal (2022/00334409) (a) Zurich's appeal allowed in part. (b) CIMIC's cross-appeal dismissed. (c) AIG's cross-appeal dismissed. (2) Berkley Appeal (2022/00334264) (a) Berkley's appeal allowed. (b) CIMIC's cross-appeal dismissed. (3) Arch/Dual Appeal (2022/00335502) (a) Arch/Dual's appeal allowed. (4) Chubb Appeal (2022/00336236) (a) Chubb's appeal dismissed. (5) Set aside Orders 9, 10, 11 and 13 made on 12 October 2022 and Orders 7 and 8 made on 23 June 2023. (6) In lieu thereof order that: (a) Subject to the relief granted by Orders 2 to 5 made on 12 October 2022 and Orders 1-6 and 9 made on 23 June 2023, CIMIC's further amended summons dismissed with costs. (b) AIG's first cross-claim against Berkley dismissed with costs. (7) Within 28 days hereof the parties provide the Court with consent orders as to the costs of the proceedings in this Court, to the extent agreement has been reached. (8) To the extent agreement as to the costs of the appeals, cross-appeals, and notices of contention has not been reached, within 28 days hereof the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party's submissions on the matters in contention concerning costs. The issues of costs will, subject to any contrary order, be dealt with on the papers and without a further hearing. Catchwords: INSURANCE – Insurance Contracts Act 1984 (Cth) – non-disclosure and misrepresentation – duty of disclosure – where senior executive of Leighton made a file note in November 2010 detailing conversations with another senior executive ("Iraq File Note") – where that executive advised he had an opportunity to extend/vary a contract for a major infrastructure project in Iraq but it would require payment to a third party nominated subcontractor of $50-$60 million where the real value of the work was less than 50% of the payment, and that the current contract was won by a payment to a nominated subcontractor "on the same terms" – where Iraq File Note not disclosed to insurers for 2011 year ("2011 Insurers") – where Leighton subsequently entered into primary and excess layers of D&O Insurance for the 2011 year ("2011 Policies") – whether Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act and made a misrepresentation to the 2011 Insurers INSURANCE – Insurance Contracts Act 1984 (Cth) – whether the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act INSURANCE – Liability insurance – directors and officers – whether cll 5.3 and 7.1 of the 2011 Policy precluded the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act – whether cl 5.3(ii) of the 2011 Policy operated so that limit of liability under previous years policy (as reduced by amounts previously paid) applied to CIMIC's claims INSURANCE – Insurance Contracts Act 1984 (Cth) – contribution – whether AIG entitled to equitable contribution of 50% from Berkley and Swiss Re – where, without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley – whether an omission to form an expectation that a claim could arise is a relevant omission for the purposes of s 54 of the Insurance Contracts Act INSURANCE – Liability insurance – directors and officers – where primary judge granted declaratory relief against insurers for the 2010 year – whether Court had jurisdiction to grant declaratory relief or alternatively whether the exercise of jurisdiction to grant declaratory relief miscarried APPEALS – Procedural fairness – whether primary judge denied Berkley procedural fairness in limiting its cross-examination of two witnesses Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 33 Bankruptcy Act 1966 (Cth) Commonwealth Constitution, Ch III, s 76(ii) Corporations Act 2001 (Cth), ss 9, 181, 184, 1307 Corrections Management Act 2007 (ACT) Corrective Services Regulation 1989 (Qld), s 13(2) Evidence Act 1995 (NSW), ss 69, 136, 140 Foreign Corrupt Practices Act, 15 USC §§ 78dd-1 (1977) Insurance Contracts Act 1984 (Cth), ss 21, 27AA, 28, 40, 51(1), 54, 57 Judiciary Act 1903 (Cth), s 39(2) Limitation Act 1969 (NSW), s 14(1)(a) Migration Act 1958 (Cth), ss 417, 485 Supreme Court Act 1970 (NSW), ss 63, 75 Cases Cited: Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10 Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342; [1969] HCA 55 All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782 Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 Antico v Heath Fielding Australia Pty Limited (1997) 188 CLR 652; [1997] HCA 35 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 Aussie Tax Pty Ltd v Markel Capital Limited [2008] VSC 592 Australian Broadcasting Corporation v Wing (2019) 271 FCR 632; [2019] FCAFC 125 Australian Hospital Care Pty Ltd v Swinbank (Court of Appeal (Qld), 9 July 1999, unrep) Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751 Avant Insurance Ltd v Burnie [2021] NSWCA 272 AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26; (2023) 97 ALJR 674 Bartz v Department of Corrective Services [2000] QSC 336 Bass v Permanent Trustee Company Limited (1999) 198 CLR 334; [1999] HCA 9 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 Brighton Ceiling Pty Ltd v Pocrnja [2005] NSWCA 175 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brotherton v Aseguradora Colseguros SA (No 2) [2003] EWCA Civ 705; [2003] 2 All ER (Comm) 298 Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 Cabal v United Mexican States (2001) 108 FCR 311; [2001] FCA 427 Caledonia North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123 Cantone v Insurance Australia Limited [2022] FCA 1009 CGU Insurance Limited v Blakeley (2016) 259 CLR 339; [2016] HCA 2 CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30 Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7 CIMIC Group Limited v AIG Australia Limited (No 2) [2023] NSWSC 640 Commercial Union Assurance Co of Australia Ltd v Beard (1999) 47 NSWLR 735; [1999] NSWCA 422 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Edwards v Santos Limited (2011) 242 CLR 421; [2011] HCA 8 ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 FAI General Insurance Co Limited v Australian Hospital Care Pty Limited (2001) 204 CLR 641; [2001] HCA 38 FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (1999) 153 FLR 448 Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12 Forster v Jododex Australia Pty Limited (1972) 127 CLR 421; [1972] HCA 61 Galaxy Communications Pty Ltd v Paramount Films of Australia Inc [1998] NSWCA 89 GIO General Limited v Wallace [2001] NSWCA 299 Gregg v R [2020] NSWCCA 245 Gregory v Philip Morris Ltd (1988) 80 ALR 455 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6; [2003] 1 All ER (Comm) 349 HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31 Hobart International Airport Pty Ltd v Clarence City Council (2022) 276 CLR 519; [2022] HCA 5 House v The King (1936) 55 CLR 499; [1936] HCA 40 Inversiones Manria S.A. v Sphere Drake Insurance Co. Plc. (The 'Dora') [1989] 1 Lloyd's Rep 69 Islam v Director-General, Justice and Community Safety Directorate [2022] ACTSC 124 Jennings v Wilden [2023] NSWCA 41 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Khoury v Government Insurance Office of New South Wales (1984) 165 CLR 622; [1984] HCA 55 Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1975) 1 BPR 9177 Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19 Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172 Macteldir Pty Limited v Dimovski [2005] FCA 1528 Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062 Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32 Maxwell v Highway Hauliers Pty Ltd (2014) 252 CLR 590; [2014] HCA 33 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 Minister for Immigration and Multicultural Affairs v Ozmanian (1996) 71 FCR 1 Moltoni Corporation Pty Limited v QBE Insurance Limited (2001) 205 CLR 149; [2001] HCA 73 Murphy v Abi-Saab (1995) 37 NSWLR 280 National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286; [1974] HCA 18 Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222 Onley v Catlin Syndicate Ltd as the Underwriting Member of Lloyd's Syndicate 2003 [2018] FCAFC 119 Palmer v Ayres (2017) 259 CLR 478; [2017] HCA 5 Permanent Trustee Australia Limited v FAI General Insurance Company Limited (in liq) (2003) 214 CLR 514; [2003] HCA 25 Plaintiff M61/2010E v The Commonwealth of Australia (2010) 243 CLR 319; [2010] HCA 41 Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2014] NSWCA 440 QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd (2009) 24 VR 326; [2009] VSCA 124 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141; [1945] HCA 50 Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73 Stealth Enterprises Pty Ltd t/as The Gentlemen's Club v Calliden Insurance Limited [2017] NSWCA 71 Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The 'Grecia Express') [2002] EWHC 203 (Comm); [2002] 2 All ER (Comm) 213 Tosich v Tasman Investment Management Limited [2008] FCA 377 Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 Unions NSW v New South Wales [2023] HCA 4; (2023) 97 ALJR 150 Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (Liability Judgment) [2023] FCA 190 Viterra Malt Pty Ltd v Cargill Australia Limited [2023] VSCA 157 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71 Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd (2016) 244 FCR 5; [2016] FCAFC 150 Yarrabee Coal Company Pty Ltd v Lujans [2009] NSWCA 85 Texts Cited: Insurance Contracts Bill 1984 (Cth) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Butterworths) Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press) RS French, "Declarations – Homer Simpson's Remedy – is there anything they cannot do?" (2007) Federal Judicial Scholarship 24 Category: Principal judgment Parties: Zurich Appeal (2022/334409) Zurich Australian Insurance Limited (Appellant) CIMIC Group Limited (First Respondent) AIG Australia Limited (Second Respondent) Chubb Insurance Australia Limited (Third Respondent) Catlin Syndicate Limited (Fourth Respondent) Catlin Australia Pty Limited (Fifth Respondent) Liberty Mutual Insurance Company (Sixth Respondent) Berkley Insurance Company (Seventh Respondent) Swiss Re International SE (Eighth Respondent) Arch Underwriting at Lloyd's Limited on Behalf of Syndicate 2012 (Ninth Respondent) Dual Australia Pty Ltd (Tenth Respondent) Berkley Appeal (2022/334264) Berkley Insurance Company (Appellant/First Cross-Respondent) CIMIC Group Limited (First Respondent/First Cross-Appellant) AIG Australia Limited (Second Respondent/Third Cross-Respondent) Chubb Insurance Australia Limited (Third Respondent/Second Cross-Respondent) Catlin Syndicate Limited (Fourth Respondent) Catlin Australia Pty Limited (Fifth Respondent/Fourth Cross-Respondent) Liberty Mutual Insurance Company (Sixth Respondent/Sixth Cross-Respondent) Zurich Australian Insurance Limited (Seventh Respondent/Eighth Cross-Respondent) Swiss Re International SE (Eighth Respondent/Seventh Cross-Respondent) Arch Underwriting at Lloyd's Limited on Behalf of Syndicate 2012 (Ninth Respondent/Ninth Cross-Respondent) Dual Australia Pty Ltd (Tenth Respondent/Tenth Cross-Respondent) Arch/Dual Appeal (2022/335502) Arch Underwriting at Lloyd's Limited on Behalf of Syndicate 2012 (First and Second Appellants) Dual Australia Pty Ltd (Second Appellant) CIMIC Group Limited (First Respondent) AIG Australia Limited (Second Respondent) Chubb Insurance Australia Limited (Third Respondent) Catlin Syndicate Limited (Fourth Respondent) Catlin Australia Pty Limited (Fifth Respondent) Liberty Mutual Insurance Company (Sixth Respondent) Berkley Insurance Company (Seventh Respondent) Swiss Re International SE (Eighth Respondent) Zurich Australian Insurance Limited (Ninth Respondent) Chubb Appeal (2022/336236) Chubb Insurance Australia Limited (Appellant) CIMIC Group Limited (First Respondent) AIG Australia Limited (Second Respondent) Catlin Syndicate Limited (Third Respondent) Catlin Australia Pty Limited (Fourth Respondent) Liberty Mutual Insurance Company (Fifth Respondent) Berkley Insurance Company (Sixth Respondent) Swiss Re International SE (Seventh Respondent) Zurich Australian Insurance Limited (Eighth Respondent) Arch Underwriting at Lloyd's Limited on Behalf of Syndicate 2012 (Ninth Respondent) Dual Australia Pty Ltd (Tenth Respondent) Representation: Counsel: Zurich Appeal (2022/334409) R Dick SC and S Fitzpatrick (Appellant) M Jones SC and B Ryde (First Respondent) G Rich SC and E Bathurst (Second Respondent) S Donaldson SC and K Lindeman (Third Respondent) I R Pike SC and M F Newton (Fourth and Fifth Respondents) M Elliot SC and L Hulmes (Sixth Respondent) B Walker SC and M A Friedgut (Seventh Respondent) E C Muston SC and H Mann (Eighth Respondent) A Horvath SC and M Caristo (Ninth and Tenth Respondents) Berkley Appeal (2022/334264) B Walker SC and M A Friedgut (Appellant/First Cross-Respondent) M Jones SC and B Ryde (First Respondent/First Cross-Appellant) G Rich SC and E Bathurst (Second Respondent/Third Cross-Respondent) S Donaldson SC and K Lindeman (Third Respondent/Second Cross-Respondent) I R Pike SC and M F Newton (Fourth Respondent and Fifth Respondent/Fourth Cross-Respondent) M Elliot SC and L Hulmes (Sixth Respondent/Sixth Cross-Respondent) R Dick SC and S Fitzpatrick (Seventh Respondent/Eighth Cross-Respondent) E C Muston SC and H Mann (Eighth Respondent/Seventh Cross-Respondent) A Horvath SC and M Caristo (Ninth Respondent/Ninth Cross-Respondent and Tenth Respondent/Tenth Cross-Respondent) Arch/Dual Appeal (2022/335502) A Horvath SC and M Caristo (First and Second Appellants) M Jones SC and B Ryde (First Respondent) G Rich SC and E Bathurst (Second Respondent) S Donaldson SC and K Lindeman (Third Respondent) I R Pike SC and M F Newton (Fourth and Fifth Respondents) M Elliot SC and L Hulmes (Sixth Respondent) B Walker SC and M A Friedgut (Seventh Respondent) E C Muston SC and H Mann (Eighth Respondent) R Dick SC and S Fitzpatrick (Ninth Respondent) Chubb Appeal (2022/336236) S Donaldson SC and K Lindeman (Appellant) M Jones SC and B Ryde (First Respondent) G Rich SC and E Bathurst (Second Respondent) I R Pike SC and M F Newton (Third and Fourth Respondents) M Elliot SC and L Hulmes (Fifth Respondent) B Walker SC and M A Friedgut (Sixth Respondent) E C Muston SC and H Mann (Seventh Respondent) R Dick SC and S Fitzpatrick (Eighth Respondent) A Horvath SC and M Caristo (Ninth and Tenth Respondents) Solicitors: Zurich Appeal (2022/334409) YPOL Lawyers (Appellant) Allens (First Respondent) Wotton & Kearney (Second Respondent) Lander & Rogers (Third Respondent) DLA Piper (Fourth and Fifth Respondents) Colin Biggers & Paisley (Sixth Respondent) Mills Oakley (Seventh Respondent) Kennedys (Eighth Respondent) Moray & Agnew (Ninth and Tenth Respondents) Berkley Appeal (2022/334264) Mills Oakley (Appellant/First Cross-Respondent) Allens (First Respondent/First Cross-Appellant) Wotton & Kearney (Second Respondent/Third Cross-Respondent) Lander & Rogers (Third Respondent/Second Cross-Respondent) DLA Piper (Fourth Respondent and Fifth Respondent/Fourth Cross-Respondent) Colin Biggers & Paisley (Sixth Respondent/Sixth Cross-Respondent) YPOL Lawyers (Seventh Respondent/Eighth Cross-Respondent) Kennedys (Eighth Respondent/Seventh Cross-Respondent) Moray & Agnew (Ninth Respondent/Ninth Cross-Respondent and Tenth Respondent/Tenth Cross-Respondent) Arch/Dual Appeal (2022/335502) Moray & Agnew (First and Second Appellants) Allens (First Respondent) Wotton & Kearney (Second Respondent) Lander & Rogers (Third Respondent) DLA Piper (Fourth and Fifth Respondents) Colin Biggers & Paisley (Sixth Respondent) Mills Oakley (Seventh Respondent) Kennedys (Eighth Respondent) YPOL Lawyers (Ninth Respondent) Chubb Appeal (2022/336236) Lander & Rogers (Appellant) Allens (First Respondent) Wotton & Kearney (Second Respondent) DLA Piper (Third and Fourth Respondents) Colin Biggers & Paisley (Fifth Respondent) Mills Oakley (Sixth Respondent) Kennedys (Seventh Respondent) YPOL Lawyers (Eighth Respondent) Moray & Agnew (Ninth and Tenth Respondents) File Number(s): 2022/334409; 2022/334264; 2022/335502; 2022/336236 Publication restriction: Nil. Decision under appeal Court or tribunal: Supreme Court of NSW Jurisdiction: Equity Citation: [2022] NSWSC 999 Date of Decision: 27 July 2022 Before: Peden J File Number(s): 2020/00172061 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] On 30 March 2010 Leighton Offshore Pte Ltd ("Leighton Offshore"), a subsidiary of Leighton Holdings Limited ("Leighton", now known as CIMIC Group Limited ("CIMIC")), submitted a bid for a large infrastructure project known as the Iraq Phase 1 Project. On 7 April 2010 Russell Waugh (Chief Executive Officer ("CEO") of Leighton Offshore) met Peter Willimont of Unaoil Ltd ("Unaoil"). Mr Willimont wanted to know if Leighton Offshore was interested in a "package proposal" for the Iraq Phase 1 Project onshore works. Mr Waugh told Mr Willimont that Leighton Offshore was interested but that it "had to be commercially attractive". On 26 May 2010 Mr Waugh met with Mr Willimont in Perth. Later that day, Mr Waugh asked an employee of Leighton Offshore to urgently prepare an updated green sheet outlining a proposed bid. The green sheet was updated, with the bid price increased by a little over US$65 million. A division of Leighton Offshore and Unaoil entered into a Memorandum of Understanding ("MOU") dated 31 May 2010, by which Leighton and Unaoil agreed a subcontract concerning "Onshore Works" as defined in the MOU for an "all inclusive" price of US$65 million. The MOU also included a term that Leighton pay liquidated damages to Unaoil, in the event Leighton was awarded the contract for the Iraq Phase 1 Project but did not award a subcontract to Unaoil. On 22 June 2010 Leighton Offshore submitted its revised fixed sum bid price for the Iraq Phase 1 Project. Thereafter, Leighton and Unaoil signed a Memorandum of Agreement ("MOA") and a Supplementary Agreement increasing both the subcontract and liquidated damages amounts. Emails indicated that Unaoil had some kind of relationship with Oday Al Quoraishi ("Mr Oday"). Mr Oday was the Project Manager for the Iraq Phase 1 Project, working for the Iraqi entity which invited Leighton to bid for that project. There is some material which may suggest that Unaoil was paying money to Mr Oday to act in Unaoil's interests. On 23 October 2010 Leighton Offshore entered into a US$733 million contract with Southern Oil Company ("SOC") for the Iraq Phase 1 Project ("Iraq Phase 1 Contract"). SOC was a subsidiary of the Iraq National Oil Company. Leighton Offshore entered into a subcontract agreement with Unaoil on 8 December 2010 in respect of the Iraq Phase 1 Project. On 1 November 2010 invitations were issued to bid for the Iraq Phase 3 Project. On 23 November 2010 David Stewart (a Chief Operating Officer ("COO") of Leighton and later CEO of Leighton) had two conversations with David Savage (a COO of Leighton). Mr Stewart made a file note during and shortly following these conversations which recorded that Mr Savage had advised that he had an opportunity to negotiate an extension/variation to the current contract in Iraq but that it would require a payment to a third party nominated subcontractor who would do all onshore works, that that payment was $50-$60 million but the real value of the work was less than 50% of the payment, and that the current $720 million contract was won by an $87 million payment to a nominated subcontractor "on the same terms" ("Iraq File Note"). The Iraq File Note also recorded that Mr Stewart said that this was "exactly what got the [Australian Wheat Board] into trouble", and that Mr Stewart said he would talk to Wallace King (then Leighton CEO) and Mr Savage said "no". The Iraq File Note recorded that Mr Stewart, having discussed with matter with William Wild (a COO and later deputy CEO of Leighton), told Mr Savage that he was not comfortable with the arrangements and that if he couldn't win without them then Leighton didn't want the work. On 18 April 2011 Leighton Offshore submitted its bid for the Iraq Phase 3 Project. On 13 October 2011 it was awarded the contract ("Iraq Phase 3 Contract"). In the financial year commencing 30 June 2010 ("2010 year") Leighton had a primary layer of Directors' and Officers' Liability and Company Security ("D&O") Insurance with AIG ("2010 Primary Policy") and excess layers with, relevantly Chubb, Liberty, Berkley, Swiss Re, Zurich and Arch/Dual ("2010 Excess Policies", together "2010 Policies" and "2010 Insurers"). Leighton did not make any notification of the matters identified in the Iraq File Note, or of a possible loss, to the 2010 Insurers, nor make any claim under the 2010 Policies. In May 2011 Leighton submitted a proposal form ("2011 Proposal") for D&O Insurance for the financial year commencing 30 June 2011 ("2011 year"). Leighton did not disclose the existence of the Iraq File Note, or any of its contents, in the 2011 Proposal. Leighton subsequently entered into a primary layer of D&O Insurance, insured as to 50% by each of AIG and Chubb ("2011 Primary Policy"), and excess layers with Catlin and Liberty ("2011 Excess Policies", together "2011 Policies" and "2011 Insurers") for the 2011 year. In early-November 2011 the Iraq File Note was discovered by Leighton's external solicitors. On 7 November 2011 Leighton referred the Iraq File Note to the Australian Federal Police ("AFP"). On 13 February 2012, Leighton issued an ASX Media Release. On 22 February 2012 Leighton notified the 2011 Insurers of a possible loss under the 2011 Policies ("2012 Notification"). CIMIC subsequently claimed various losses under the 2011 Policies, including in relation to the AFP investigation, separate ASIC investigations, and costs incurred in connection with the investigation, defence and settlement of various representative proceedings arising out of an alleged failure to disclose the Iraq File Note ("Companies Securities Claims"). CIMIC brought proceedings against both the 2010 and 2011 Insurers. Only declaratory relief was sought against the 2010 Insurers, but the 2011 Insurers were sued under the 2011 Policies. The 2011 Insurers sought equitable contribution from the 2010 Insurers. By orders made on 12 October 2022 (the "Orders") the primary judge dismissed claims made by CIMIC against Catlin and Liberty, upheld a cross-claim for equitable contribution by AIG against Berkley and dismissed a cross-claim for equitable contribution by AIG against Swiss Re. The primary judge also made several declarations including that the 2011 Insurers were not liable to indemnify CIMIC for the Company Securities Claims and that the 2011 Primary Insurers were each severally liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy in respect of the AFP Investigation Costs and the ASIC Iraq Investigation Costs ("Investigation Costs"). The primary judge also granted declaratory relief against the 2010 Insurers, albeit not in the form originally sought by CIMIC ("2010 Declaration"). Zurich, Berkley, Arch/Dual and Chubb appeal and CIMIC and AIG cross-appeal against various aspects of the Orders. By way of notices of contention filed in these various appeals, AIG, Catlin, Liberty and Chubb seek to affirm various of the Orders on further grounds. The issues arising on the appeals as set out in the Agreed List of Issues were: (1) Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act 1984 (Cth)? (2) Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy's limit of liability (as reduced by amounts previously paid) applies to CIMIC's claims? (3) What is the proper construction of cl 3.2(i) of the 2011 Primary Policy? (4) What is the proper construction of cl 5.1 of the 2010 Primary Policy? (5) If cl 5.1 is to be construed as contended for by Berkley, on the primary judge's findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy? (6) Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers? (7) Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act? (8) Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers, the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful? That issue contains the following sub-issues: (a) Should the primary judge have found that the representations recorded in the Iraq File Note were true? (b) Did the primary judge err in concluding that there was insufficient evidence of "corrupt payments to win the Iraq work"? (c) Did the primary judge err in relying upon the transcript of Mr Savage's compulsory ASIC examination in the manner described at J[262]? (d) Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful? (e) Did the primary judge err in concluding there was "no evidence" that Unaoil paid money to the SOC or that Leighton was aware of Unaoil's retainer of Mr Oday? (f) Did the primary judge err in concluding that the arrangements between Leighton and Unaoil provided Leighton with "commercially justifiable advantages"? (g) Did the primary judge err in failing to find that the purpose of the liquidated damages clause agreed between Leighton and Unaoil was to ensure Unaoil (erroneously written as Leighton in the Agreed List of Issues) was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract? (h) Did the primary judge err in concluding that no part of the US$65 million increase in Leighton's revised tender price had not been demonstrated to directly relate to improper payments? (9) Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified of the Iraq File Note under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified under cl 5.1 and/or s 40(3): (a) of the existence or occurrence of the facts recorded in the Iraq File Note and/or that CIMIC and/or Mr Savage reasonably believed or believed that those facts existed or had occurred; (b) that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, won a US$733 million contract in Iraq by paying a subcontractor about US$87 million, which was more than twice the real value of the work being performed by that subcontractor; (c) that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, an opportunity to negotiate a US$500 million extension to the Iraq Phase 1 Contract, but in order to win that extension it would be required to pay US$50 to 60 million to the same subcontractor, which was more than twice the real value of the work to be performed by that subcontractor; and (d) that the payment and proposed payment to the subcontractor were unlawful or may be unlawful and/or that CIMIC and/or Mr Savage reasonably believed or believed that to be the case? (10) Did the primary judge err in identifying the retention applicable to CIMIC's claim against the 2011 Insurers? (11) Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re? (12) Did the primary judge err in making the 2010 Declaration against the 2010 Insurers based on the pleadings against them? (13) Did the primary judge err in making the 2010 Declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact? (14) Did the primary judge err in making the 2010 Declaration against Arch and Dual based on her Honour's findings and the failure to deal with the submission summarised at J[623]? (15) Did the primary judge err in making the 2010 Declaration against the 2010 Insurers on the grounds that the 2010 Declaration was hypothetical, lacked utility (including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late for it to do so), was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy? (16) Did the primary judge err in exercising the costs discretion? Berkley also raised an issue whether it was denied procedural fairness by the primary judge's rulings, which limited its cross-examination of two of CIMIC's witnesses. The Court (White JA, Stern JA and Griffiths AJA) held, allowing the Zurich Appeal in part, allowing the Berkley Appeal and the Arch/Dual Appeal, dismissing the Chubb Appeal, dismissing each of CIMIC's cross-appeals and dismissing AIG's cross-appeal: The Court found it convenient to address the Issues in a different order, which is reflected in the following summary of the Court's reasoning and findings on the Issues. When reference is made generally to the relevant policies in a year, we refer to eg 2010 Policy/Policies and 2011 Policy/Policies. Where we refer to terms (capitalised) that are defined in the policies, we refer to the term as defined in that policy. As to Issue (6) (1) There was no error in the primary judge's finding that the 2011 Insurers should succeed in their defence relying upon s 21 of the Insurance Contracts Act. The evidence supports a conclusion that the matters identified in the Iraq File Note were both known to Leighton, and that a reasonable person in Leighton's circumstances would have known (not merely strongly suspected or believed) that those matters would be relevant to whether an insurer under a proposed D&O policy would accept the risk and if so on what terms: [150]-[151]. (2) The primary judge's finding as to the materiality of the matters identified in the Iraq File Note was also correct. The question under s 21(1)(b), is whether a reasonable person in the position of Leighton could be expected to know the matter (known to Leighton) to be a matter relevant to the decision of the insurer whether to accept the risk, and if so on what terms. Matters of relevance for the purposes of this enquiry include the nature of the insurance cover sought, the fact Leighton was a large public Australian company with disclosure obligations to both regulators and to the market and the 2011 Proposal which included a direction that enquiries should be made of all appropriate staff. These matters support a conclusion that the matters identified in the Iraq File Note ought to have been disclosed to the 2011 Insurers under s 21: [152]-[153]. Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252, considered. (3) The primary judge did not err in finding that Leighton made an actionable misrepresentation in the 2011 Proposal. CIMIC's submissions as to this were derivative from its submissions as to non-disclosure under s 21. Its failure to show that the primary judge erred as regards s 21 necessarily means that its contention that the primary judge erred in finding a misrepresentation is also rejected: [182]. As to Issue (7) (4) The question whether each of the 2011 Insurers proved, on the balance of probabilities, what would have happened had the matters identified in the Iraq File Note been disclosed prior to the inception date for the 2011 Policies, being 30 June 2011, depends upon an assessment of the affidavit and oral evidence relied upon by the 2011 Insurers in the overarching factual context. This includes the evidence of what occurred in June 2012 after the 2012 Notification, the character of the matters identified in the Iraq File Note and the objective probabilities having regard to the factual circumstances. Those matters strongly support the conclusion that the 2011 Insurers would not have entered into D&O policies on the same terms and conditions, and for the same premium, if there had been disclosure as required by s 21 and had no misrepresentation been made: [220]-[249]. As to Issue (8) (5) The Court was satisfied on the balance of probabilities that the representations in the Iraq File Note were true: [269]-[282]. Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19, applied. (6) The Court was satisfied that Leighton paid money to Unaoil not just for their subcontracting package, but also for them to assist Leighton in winning the Iraq Phase 1 Contract: [314]-[318]. (7) The Court was not satisfied that any part of the money paid by Leighton was in fact used for corrupt payments so that Leighton would win the Iraq Phase 1 Contract: [323]-[326], [331]-[332]. (8) The Court was satisfied that Mr Savage was aware that the payments referred to in the Iraq File Note may have been unlawful and that this knowledge should be attributed to Leighton. Had it been necessary to do so, the Court would have found that Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act and made a misrepresentation to the 2011 Insurers for this additional reason: [333]-[336]. (9) However, the Court was not satisfied that Mr Savage, or Leighton, knew, reasonably believed or believed (all of which require something more than an awareness that the payment may have been unlawful) that the payment was unlawful. In this regard, the 2011 Insurers did not contend that "unlawful" meant anything other than payments for the purpose of a bribe and the Court approached Issue 8 on the understanding that that was its intended meaning: [337]. As to Issue (1) (10) The answer to Issue 1 is no: [370]. (11) There is nothing in the language of cl 5.3 that would amount to a waiver of the 2011 Insurers' rights under s 28(3) for misrepresentation. Part of the objective matrix of facts against which the 2011 Policy is to be construed is the fact that Leighton was required to complete, and did complete, the 2011 Proposal which sought disclosure of facts of which Leighton was aware which might give rise to a claim against a director or officer: [354]-[355]. (12) The Court did not accept that the duty of disclosure was waived. Clear words would be expected for such a conclusion, particularly where the policies were entered into on the basis of a proposal that asked whether Leighton was aware of any circumstances which might give rise to a claim being made against any directors or officers of Leighton or its subsidiaries. Further, the fact that cl 7.1 preserves remedies for the Insurer in respect of non-fraudulent misrepresentation or non-disclosure in respect of the Company Securities Claims is inconsistent with a construction of cl 5.3 that the duty of disclosure was waived: [361]-[362]. As to Issue (2) (13) Issue 2 should be answered no. The primary judge was correct to conclude that the erosion of AIG's liability under the 2010 Primary Policy and Chubb's liability under the 2010 First Excess Policy did not affect their liability for the Investigation Costs under the 2011 Primary Policy: [416]-[418]. (14) The critical words are those in the chapeau to cl 5.3 that "cover is provided under this policy" (emphasis added) and the distinction between that language and the language of cl 5.3(ii) that the claim is to be "dealt with" in accordance with the terms, conditions, exclusions and limitations of the policy under which the claim or circumstance could and should have been notified. It is clear from the chapeau to cl 5.3 that it is the 2011 Policy which provides the cover. Hence, the Limit of Liability is prescribed by cl 6.1 of the 2011 Policy, which refers to the "total amount payable by the Insurer under this policy" (emphasis added). Cover under cl 5.3 is provided "under" the 2011 Policy: [412]. (15) In the phrase "terms, conditions, exclusions and limitations of the policy…", "limitations" takes its meaning from the other words used. No doubt that involves surplusage. But it is not always the case that in a policy such as this it should be taken that each word should be given separate work to do. It is also to be noted that the word on which Chubb places reliance, "limitation", is not the word used in cl 6 of both the 2010 and 2011 Policies. Clause 6.1 of those policies refer to the Insurer's "Limit of Liability" being the amount specified in Item 5 of the Schedule ($30 million in the case of the 2011 Policy): [413]-[414]. As to Issues (3), (4) and (5) (16) In the light of the conclusion that the primary judge erred in making the 2010 Declaration, any views expressed on Issues 3, 4 or 5 would be obiter except in so far as they arise on AIG's claim for contribution against Berkley (Issue 11). Given that any views, particularly in relation to Issue 5, would be based upon the evidence as adduced before the primary judge, which might be different from the evidence adduced on a new claim, if one were brought, any conclusions would be liable to complicate any future hearing against the 2010 Insurers. Nor would it be appropriate to express a view on the construction of cl 5.1 where it is unnecessary to do so for the disposition of these proceedings, where that may be expected to be a live issue in any future proceeding against the 2010 Insurers heree the submissions in any such future proceeding might differ from those advanced below or in this Court. As a general proposition, courts, at least courts below the High Court, should confine themselves to deciding only those issues which they need to decide. Insofar as it was necessary to reach conclusions on these issues on AIG's cross-claim against Berkley for contribution for the AFP Investigation Costs and the ASIC Iraq Investigation Costs, to the extent any of those conclusions may give rise to issue estoppels, such estoppels would only arise as between AIG and Berkley: [425]-[427]. Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32; Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71, considered. As to Issue (9) (17) Given the findings and reasoning below concerning Issues 13 and 15, and why the primary judge erred in making the declaration in Order 13, it is neither necessary nor appropriate to answer Issue 9: [428]. As to Issue (10) (18) As the primary judge said at J[487]-[488], in light of her Honour's findings that the 2011 Insurers were not liable to pay CIMIC for the Company Securities Claims, the question of construction does not arise. As the 2011 Insurers are entitled to reduce their liability for the Company Securities Claims to nil, cover is provided only for the non-Company Securities Claims and the relevant retention is $100,000: [431]. As to Issue (11) (19) For AIG to be entitled to contribution from Berkley for the Investigation Costs CIMIC incurred, both must be liable to CIMIC and their liability must be coordinate. That will be so where there is double insurance, that is, where both insurers are liable to the insured for the same loss and where payment under one policy will relieve the other insurer from a liability which it would have if a claim had been made against it. Both insurers' obligations must be of "the same nature and to the same extent": [450]. Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342; [1969] HCA 55; HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31, applied. (20) Without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley for the Investigation Costs. If the notification of circumstances of the Iraq File Note had been given in the Policy Period applicable to Berkley's 2010 Third Excess Policy, then AIG's 2010 Primary Policy would not have responded because the limit of cover under its policy was exhausted. Only Berkley's 2010 Third Excess Policy would have responded. There would have been no mutuality of obligation and no coordinate liability: [452]. (21) Clause 5.1 does not refer to the Insured's expectation of a possible Claim or a Claim that might be made against it. A Claim is relevantly defined in cl 4.5(i) as a written demand, or civil regulatory or administrative proceeding seeking compensation or other legal remedy made or brought against an Insured alleging a Wrongful Act. In other words, there is nothing in the definition of Claim which encompasses possible claims. For cl 5.1 to be engaged there must be an actual expectation (reasonably held) that the circumstances notified would give rise to a claim. The reasons for anticipating "that Claim" with full relevant particulars must be provided: [489]. (22) AIG did not allege that Leighton had expected that the circumstances referred to in the Iraq File Note would give rise to a claim: [480]. The primary judge's findings fell short of a finding that Leighton expected that a claim would be made arising from the circumstances in the Iraq File Note. A reasonable person in the position of Leighton's executives could have had such an expectation. But their failure to form that expectation was not a relevant omission (and was not alleged to be a relevant omission) for the purposes of s 54: [490]-[491]. (23) In the context of cl 5.1 it is the forming of a reasonable expectation of a claim and not merely becoming aware of circumstances that could give rise to a claim that is a "restriction or limitation" inherent in the claim that could be made. An omission to form an expectation that a claim would arise from the circumstances of the Iraq File Note is not a relevant omission for which relief is available under s 54. The primary judge erred in ordering contribution from Berkley in respect of AIG's liability for the Investigation Costs: [492]-[493]. As to Issues (12), (13) and (15) (24) The primary judge erred in making Order 13. In the particular circumstances, the Court lacked jurisdiction to do so. There were many facts and issues which would require determination before there could be an ultimate finding as to whether or not the 2010 Insurers were obliged to indemnify CIMIC. The declaration which was granted was, in substance and effect, an advisory opinion. It ought not to have been made: [495]-[569]. (25) If it be assumed (contrary to the above) that the Court had jurisdiction to grant some form of declaratory relief in the circumstances here, the exercise of that discretion miscarried: [570]-[594]. As to Issue (14) (26) No weight should be given to the affidavit of Mr Jonathon Light. The basis for Mr Light's estimate is speculative, expressed at such a high level of generality as to provide little if any guidance or support and simply involved unsupported assertions. Accordingly, the Court accepted Arch/Dual's submission that another reason why Order 13 should not have been made against them is that CIMIC's case against them was hypothetical as there was no evidence that the 2010 Sixth Excess Policy would be triggered: [608]-[609]. (27) The contention that any future claims for costs arising out of the AFP Investigation and criminal prosecutions generated from that investigation might fall within the 2012 Notification was not contested by CIMIC on the appeal. It provides another reason why, assuming contrary to the above that Order 13 was appropriately made, it ought not to have included Arch/Dual: [610]-[611]. As to Issue (16) (28) Order 7 of the primary judge's costs orders, that there be no order as to the costs between CIMIC and the 2010 Insurers, must be set aside because the declaration in Order 13 is to be set aside. Order 8 of the primary judge's costs orders must also be set aside because Berkley's appeal against Orders 9 to 11 for contribution obtained by AIG is to be allowed: [612]-[623]. As to Berkley's complaint of procedural unfairness (29) There is no substance in Berkley's complaint of procedural unfairness relating to its opportunity to test the evidence of Messrs Stewart and Wild. Berkley failed to identify with sufficient particularity the scope of its cross-examination of Mr Stewart. Berkley has demonstrated no practical injustice which it suffered as a result of the limitations imposed by the primary judge on its questioning of Mr Stewart. Moreover, Berkley did not press its request to cross-examine Mr Wild: [624]-[629]. Table of contents The losses for which CIMIC claimed The towers of insurance for the 2010 and 2011 years The primary judge's orders and declarations The appeals, cross-appeals and notices of contention before the Court The policies of insurance The issues to be determined and the structure of this judgment Fact finding on appeal Summary of factual background Operational structure of Leighton Leighton's Operations in Iraq Unaoil and Mr Oday Iraq Phase 1 Project Iraq Phase 3 Project The Iraq File Note Witness evidence about the Iraq File Note The 2011 Proposal Discovery of the Iraq File Note Notification to the 2011 Insurers Issue 6: Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers? Section 21 of the Insurance Contracts Act Applicable principles The primary judge's key findings as to breach of s 21 and the parties' challenges to these findings Arrangements between Leighton Offshore and Unaoil The Iraq File Note Leighton's knowledge for the purposes of s 21 Mr Stewart and Mr Wild Mr Savage Consideration Conclusion as to Issue 6 Issue 7: Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act? Section 28 of the Insurance Contracts Act Applicable principles Background facts and the primary judge's findings as to s 28(3) AIG The evidence before the Court The primary judge's findings Chubb The evidence before the Court The primary judge's findings Catlin The evidence before the Court The primary judge's findings Liberty The evidence before the Court The primary judge's findings Consideration AIG Chubb, Catlin and Liberty Conclusion as to Issue 7 Issue 8: Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful? Should the primary judge have found that the representations recorded in the Iraq File Note were true? Did the primary judge err in concluding that there was insufficient evidence of "corrupt payments to win the Iraq work"? The Iraq File Note as a whole Mr Oday's role and relationship with Unaoil Interactions between Unaoil and Mr Waugh Subsequent communications involving Mr Oday, Unaoil and Mr Waugh The MOAs and the liquidated damages provisions The US$15 million for the "heavy lift" vessel added on 26 May 2010 Communication of confidential information to Unaoil and Mr Waugh What inference should be drawn in the circumstances? Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful? Conclusion as to Issue 8 Issue 1: Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act? Issue 2: Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy's limit of liability (as reduced by amounts previously paid) applies to CIMIC's claims? Issue 3: What is the proper construction of cl 3.2(i) of the 2011 Policy? Issue 4: What is the proper construction of cl 5.1 of the 2010 Policy? Issue 5: If cl 5.1 is to be construed as contended for by Berkley, on the primary judge's findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy? Issue 9: Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified several additional matters under cl 5.1 and/or s 40(3)? Issue 10: Did the primary judge err in identifying the retention applicable to CIMIC's claim against the 2011 Insurers? Issue 11: Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re? Issue 12: Did the primary judge err in making the declaration against the 2010 Insurers based on the pleadings against them? Issue 13: Did the primary judge err in making the declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact? Issue 15: Did the primary judge err in making the declaration against the 2010 Insurers on the grounds that the declaration was hypothetical, lacked utility "including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late to do so", was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy? Some background matters The proceedings below concerning CIMIC's alternative case against the 2010 Insurers Consideration and determination of challenges concerning Order 13 Federal jurisdiction The primary judge's reasons in support of granting a form of the alternative declaration sought by CIMIC The challenges to Order 13 Jurisdiction to grant declaration in terms of Order 13 Alternatively, the Court's discretion to grant declaratory relief miscarried Issue 14: Did the primary judge err in making the declaration against Arch/Dual based on her Honour's findings and the failure to deal with the submissions summarised at J[623]? The pleading objections Mr Light's affidavit and the question whether Arch/Dual's layer would be reached Whether future claims for costs fell within the 2012 Notification Issue 16: Did the primary judge err in exercising the costs discretion? Berkley's complaint of procedural unfairness Costs of the appeal Judgment 1. THE COURT: These appeals arise out of a dispute between CIMIC Group Limited ("CIMIC"), formerly Leighton Holdings Limited ("Leighton"), and its tower of Directors' and Officers' Liability and Company Security ("D&O") insurers for the financial year commencing 30 June 2011 ("2011 Insurers" and "2011 year" respectively). Whilst numerous issues are raised by multiple parties, those issues fall broadly within three categories. First, did the primary judge err in finding that the 2011 Insurers were not liable to indemnify CIMIC for losses which CIMIC claimed fell within the ambit of the relevant policies. Second, did the primary judge err in not making additional findings adverse to CIMIC, which the 2011 Insurers say would have provided further support for the conclusion that the 2011 Insurers were not liable under the policies. Third, did the primary judge err in making a declaration as to a matter which had some relevance to potential liability of Leighton's insurers for the financial year commencing 30 June 2010 ("2010 Insurers" and "2010 year", respectively) where no claim had been notified. 2. The dispute stems from a notification on 23 February 2012 by Leighton to two of the 2011 Insurers (AIG Australia Limited ("AIG") and Chubb Insurance Australia Ltd ("Chubb") (together the "2011 Primary Insurers")) of a possible loss ("2012 Notification"). 3. The 2012 Notification attached a Leighton ASX media release of 13 February 2012 ("2012 ASX Media Release"), which identified that Leighton had reported to the Australian Federal Police ("AFP") a possible breach of Leighton's Code of Ethics that, if substantiated, may contravene Australian laws. The report to the AFP occurred on 7 November 2011 when Leighton's solicitors gave to the AFP a handwritten document headed "Iraq Project Discussion File Note 23/11/10" ("Iraq File Note") which was written on 23 November 2010 by David Stewart, Leighton's incoming Chief Executive Officer ("CEO") and then Chief Operating Officer ("COO"). The content of the Iraq File Note, which plays a central role in these proceedings, is set out at [90] below. The primary judge found that, by the 2012 Notification, Leighton notified a claim under the 2011 primary insurance policy held with AIG and Chubb ("2011 Primary Policy"). 4. In this judgment, for convenience only, we refer to the first respondent in these proceedings as "Leighton" when referring to events between 2010 and 2012 and as "CIMIC" when referring to more recent events. No significance attaches to our use of Leighton or CIMIC as regards any particular occurrence or finding. When reference is made generally to the relevant policies in a year, we refer to eg 2010 Policy/Policies and 2011 Policy/Policies. Where we refer to terms (capitalised) that are defined in the policies, we refer to the term as defined in that policy. Background The losses for which CIMIC claimed 1. The various losses which CIMIC claimed fell under either the 2011 Primary Policy or the various excess layers ("2011 Excess Policies", together the "2011 Policies") or under the primary D&O policy for the 2013 financial year held with Chubb ("2013 Primary Policy"), and their quantification as found by the primary judge, were as follows: 1. The AFP Investigation Costs, being costs incurred by CIMIC in connection with an investigation by the AFP into matters which were the subject of the referral by Leighton to the AFP on 7 November 2011. The AFP Investigation Costs were $225,000 plus $70,000 in interest payable by each of AIG and Chubb in equal parts. 2. The ASIC Non-Iraq Investigation Costs, being costs incurred in connection with an investigation by the Australian Securities and Investments Commission ("ASIC") which had no connection to the 2012 Notification. The ASIC Non-Iraq Investigation costs were $63,350 plus $21,750 in interest. 3. The ASIC Iraq Investigation Costs, being costs incurred by CIMIC in connection with an investigation by ASIC into suspected contraventions of ss 181, 184 and/or 1307 of the Corporations Act 2001 (Cth) by the directors, officers and/or employees of Leighton and/or its subsidiaries in relation to payments made to third parties between 2009 and 2011 in order to secure contracts for the development of offshore loading facilities for crude oil exports in Iraq. The ASIC Iraq Investigation Costs were $1,013,600 plus interest of $348,000 payable by each of AIG and Chubb in equal parts. 4. The Gregg Prosecution Costs, being costs incurred in connection with the investigation and defence of the (ultimately unsuccessful) prosecution of Peter Gregg, the Chief Financial Officer ("CFO") of Leighton. These were unrelated to the Iraq File Note. The Gregg Prosecution Costs were $2,512,000 plus $422,000 in interest. 5. The MCI Class Action Defence Costs, being costs incurred in connection with the investigation and defence of two representative proceedings commenced by Melbourne City Investments Pty Ltd ("MCI Class Action"). These included claims of misleading or deceptive conduct and breaches of continuous disclosure obligations arising out of an alleged failure to disclose the Iraq File Note. The MCI Class Action Defence Costs were $1,190,000. 6. The Inabu Class Action Defence Costs, being costs incurred in connection with the investigation and defence of representative proceedings commenced by Inabu Pty Ltd ("Inabu Class Action"). These also included claims of misleading or deceptive conduct and breaches of continuous disclosure obligations arising out of an alleged failure to disclose the Iraq File Note. The Inabu Class Action Defence Costs were $7,233,000. 7. The Inabu Settlement Amount, being the settlement amount of $32.4 million paid in the Inabu Class Action. 1. For convenience, in this judgment we will refer to the MCI and Inabu Class Action Defence Costs and the Inabu Settlement Amount collectively as the "Company Securities Claims". 2. Leighton had also entered into D&O primary and excess policies of insurance for the financial year commencing 30 June 2010 ("2010 Primary Policy" and "2010 Excess Policy" respectively, together the "2010 Policies"). CIMIC did not make a claim on the 2010 Insurers under those policies. But it did seek a declaration that if, as alleged by various of the 2011 Insurers as a basis for their denial of liability, the circumstances that gave rise to the claim could and should have been notified under the 2010 Policies, then, as against various of the 2010 excess insurers, it remained entitled to notify such circumstances under the 2010 Policies. The towers of insurance for the 2010 and 2011 years 1. The two towers of CIMIC's Directors' and Officers' Liability and Company Securities Insurance ("D&O Insurance") for the 2010 and 2011 years are set out in the below diagram, which is derived from CIMIC's written submissions at first instance and is extracted in the primary judgment. The extent of erosion of each layer, as set out in CIMIC's written submissions dated 3 June 2022, is also indicated. 1. Where we refer, in this judgment, to the 2010 and 2011 Primary and Excess Insurers, we are referring to the various insurers described in this diagram. 2. The inception date for the contracts of insurance for the 2010 year was 30 June 2010. For the 2011 year it was 30 June 2011. The primary judge's orders and declarations 1. CIMIC brought proceedings against both the 2010 and 2011 Insurers. Only declaratory relief was sought against the 2010 Insurers, but the 2011 Insurers were sued under the 2011 Policies. The 2011 Insurers sought equitable contribution from the 2010 Insurers. By orders made on 12 October 2022 (the "Orders") the primary judge dismissed the claims made by CIMIC against Catlin Syndicate Limited and Catlin Australia Pty Limited (together "Catlin") and Liberty Mutual Insurance Company ("Liberty"), upheld a cross-claim for equitable contribution by AIG against Berkley Insurance Company ("Berkley") and dismissed the cross-claim for equitable contribution by AIG against Swiss Re International SE ("Swiss Re"). The primary judge also made a number of declarations. These are considered in detail below. Reduced to their bare essentials, and excluding declarations as to interest and costs, the declarations provided as follows: As regards the 2011 Policies 1. The 2011 Insurers are not, under the 2011 Policies, liable to indemnify CIMIC for the ASIC Non-Iraq Investigation Costs, the Gregg Prosecution Costs or the Company Securities Claims. 2. AIG and Chubb, being the 2011 Primary Insurers, are each severally liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy and subject to a single retention of $100,000 for costs paid by CIMIC after 8 May 2014 in respect of the AFP Investigation Costs and the ASIC Iraq Investigation Costs, together with interest. 3. Chubb is liable under the 2013 Primary Policy, subject to its terms and conditions, for the Gregg Prosecution Costs and the ASIC Non-Iraq Investigation Costs (in respect of one investigation) less a retention of $1 million, and the ASIC Non-Iraq Investigation Costs (in respect of another investigation) less a retention of $1 million, together with interest. 4. The Continuity Date applicable to the 2011 First Excess Policy, which Leighton held with Catlin ("Catlin's 2011 First Excess Policy"), is 30 June 2011. As regards the 2010 Policies 1. By 23 November 2010, Leighton was aware of the following circumstances: 1. on 23 November 2010, Leighton's CEO-designate, Mr Stewart, had a conversation with David Savage, a COO of Leighton, during which Mr Savage made representations to the effect of those recorded in the Iraq File Note; and 2. the matters identified at J[318] of the primary judgment, set out below at [131], which, collectively, were reasonably expected to give rise to a Claim (as defined in the 2010 Primary Policy) pursuant to cl 5.1 of the 2010 Primary Policy and accordingly could have been notified to each of Chubb, Berkley, Swiss Re, Zurich Australian Insurance Limited ("Zurich"), Arch Underwriting at Lloyd's Limited on behalf of Syndicate 2012 ("Arch") and Dual Australia Pty Ltd ("Dual") (being the first to sixth excess insurers for the 2010 year) under their respective excess policies. We will refer to this as the 2010 Declaration. 1. It is of some significance to the issues raised on appeal that the 2010 Declaration was in a substantially different form from that sought in CIMIC's further amended summons. The declaration as then sought was that CIMIC was entitled as against Berkley, Swiss Re, Zurich, Chubb, Arch and Dual, in reliance upon s 54(1) of the Insurance Contracts Act 1984 (Cth) and the "Notification" and "Deeming" clauses, cll 5.1 and 5.4 respectively incorporated into the 2010 Policies, to notify circumstances, being the existence and contents of the Iraq File Note. 2. Broadly, the orders and declarations of the primary judge were supported by findings that: 1. In respect of the Company Securities Claims, the 2011 Insurers were entitled to rely upon pre-inception non-fraudulent non-disclosure or misrepresentation under ss 21 and 28(3) of the Insurance Contracts Act to reduce their liability to nil. 2. As regards the AFP Investigation Costs and the ASIC Iraq Investigation Costs, the 2011 Insurers were not entitled to any remedy for non-fraudulent non-disclosure as such remedies had been excluded by cl 7.1 of the 2011 Primary Policy. Claims for indemnity for costs incurred up to and including 7 May 2014 were, however, statute barred pursuant to s 14(1)(a) of the Limitation Act 1969 (NSW). 3. Chubb was liable for the Gregg Prosecution Costs and the ASIC Non-Iraq Investigation Costs as these fell within the indemnity given under the 2013 Primary Policy and these costs did not have the requisite connection to the 2012 Notification and thus did not fall within the 2011 Primary Policy. 4. If necessary, AIG was entitled as against Berkley (but not Swiss Re) to equitable contribution in an amount that is 50% of the amount paid by AIG to CIMIC in respect of the AFP Investigation Costs and ASIC Iraq Investigation Costs as the loss was covered by both policies as at the time of the insuring clause event. 5. The Court both had power to, and should, make the 2010 Declaration as it would have the effect of ensuring that a notification under cl 5.1 (if made) would not be rejected only on the basis that the circumstance was not reasonably expected to give rise to a claim (as is necessary under cl 5.1), but would leave open the possibility that the notification would still not lead to an indemnity for other reasons. The appeals, cross-appeals and notices of contention before the Court 1. The appeals, cross-appeals, and notices of contention ("NOCs") raise overlapping matters of some complexity. By way of summary only, the following challenges are raised in this Court. The Zurich Appeal 1. Zurich appeals against the primary judge's decision to make the 2010 Declaration and against the primary judge's finding that the 2011 Insurers were entitled to rely upon non-disclosure to reduce their liability, in respect of the Company Securities Claims, to nil under s 28(3) of the Insurance Contracts Act, including having regard to cll 5.3 and 7.1 of the 2011 Primary Policy ("Zurich Appeal"). 2. CIMIC cross-appeals, contending that if Zurich succeeds in its appeal in relation to the 2011 Insurers' liability, then consequential orders should be made ordering that AIG, Chubb and Liberty are liable under the 2011 Primary Policy and the 2011 Second Excess Policy to indemnify CIMIC in respect of the Company Securities Claims and are also liable to pay interest on these costs. 3. AIG also cross-appeals, contending that if Zurich succeeds in its appeal against the primary judge's findings in relation to the 2011 Insurers' liability, then consequential orders should be made ordering that Berkley and Swiss Re pay, by way of equitable contribution, 50% of the amount paid by AIG to CIMIC in respect of the Company Securities Claims and, for Swiss Re only, the AFP Investigation Costs and the ASIC Iraq Investigation Costs. 4. Swiss Re has filed a NOC, disputing that AIG is entitled to equitable contribution against it. 5. AIG and Liberty have also filed NOCs, contending that the order that AIG and Liberty are not liable to indemnify CIMIC for the ASIC Non-Iraq Investigation Costs, the Gregg Prosecution Costs and the Company Securities Claims be affirmed on the further ground that the primary judge should have found that any liability of AIG and Liberty under cl 5.3 is limited to such amount set out in the 2010 Primary Policy and 2010 Second Excess Policy as was not already exhausted by payments previously paid, which was nothing as the relevant limits of liability were already exhausted. The Arch/Dual Appeal 1. Arch and Dual appeal against the primary judge's decision to make the 2010 Declaration ("Arch/Dual Appeal"). The Berkley Appeal 1. Berkley appeals against the primary judge's decision to make the 2010 Declaration, against the order for equitable contribution and against the primary judge's rejection of Berkley's limitation defences against both the declaratory relief and the order for equitable contribution ("Berkley Appeal"). 2. CIMIC cross-appeals, contending that the primary judge erred in finding that Leighton had breached its duty of disclosure under s 21(1)(b) of the Insurance Contracts Act and in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act. CIMIC also challenges the primary judge's finding that Leighton made a misrepresentation which constituted a failure under s 27AA of the Insurance Contracts Act and that the 2011 Insurers were entitled on that account to reduce their liability to nil under s 28(3) of the Insurance Contracts Act. CIMIC also contends that if Berkley succeeds in its contention that the primary judge erred in finding that Leighton was aware of facts that could have been notified under cl 5.1 of the 2010 Primary Policy during the period of that policy, then the primary judge also erred in finding that the prior claims and circumstances exclusion in cl 3.2 of the 2011 Primary Policy was enlivened. Finally, CIMIC contends that the primary judge erred in finding that the retention was $1 million, and that the retention applied at the primary insurance layer and at each excess layer. 3. CIMIC has also filed a NOC, contending that if Berkley succeeds in persuading the Court that cl 5.1 of the 2010 Primary Policy requires that CIMIC have a subjective expectation of a claim, the 2010 Declaration should be affirmed on the ground that, on the primary judge's findings, Mr Stewart had such a subjective expectation. 4. AIG has filed a NOC, contending that the primary judge erred in: 1. Failing to find that the facts and representations by Mr Savage recorded in the Iraq File Note are true and that CIMIC was aware of those facts and representations by at least 23 November 2010 (being the date of the Iraq File Note). 2. Failing to find that the Unaoil Memoranda of Understanding ("MOU") and Memoranda of Agreement ("MOA") involved corrupt payments made so that Leighton could win the Iraq Phase 1 and Phase 3 Projects and that Leighton agreed to pay Unaoil additional money to be used improperly so Leighton could win these projects. 3. Failing to find that Mr Savage was aware on 23 November 2010 that unlawful payments had been made by Leighton to Unaoil in order to win the Iraq Phase 1 Contract and that he was proposing that Leighton make further unlawful payments to Unaoil in order to win the Iraq Phase 3 Contract. 4. Failing to find that the purpose of the liquidated damages clause in the MOUs between Leighton and Unaoil was to ensure that Unaoil was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract, in the event that contract was awarded to Leighton but Leighton failed to award the onshore works subcontract to Unaoil. 5. Failing to find that Leighton agreed to pay Unaoil about US$20 million (or many millions) more than it would otherwise have cost Leighton to complete the onshore works. 6. Failing to find that at least the US$15 million described by Russell Waugh (CEO of Leighton Offshore) as "a provision for third party vehicle for heavy lift" was Unaoil's fee for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract. 7. Relying upon the ASIC transcript of Mr Savage's compulsory examination when the evidence was subject to a limitation under s 136 of the Evidence Act 1995 (NSW) that precluded such reliance. 8. In making findings that there was no direct evidence that Unaoil ever paid money to anyone in the Southern Oil Company ("SOC"). 9. In making findings that there was no evidence that Oday Al Quoraishi of SOC agreed a retainer with Unaoil. 10. In making findings that there was no evidence that anyone at Leighton was made aware of such retainer. 11. In making findings that the Unaoil MOUs and MOAs provided Leighton with commercially justifiable advantages, and in findings leading to that conclusion. 12. In failing to find that CIMIC breached its duty of disclosure under s 21(1)(b) of the Insurance Contracts Act for the reason that from at least 23 November 2010 Leighton knew but did not disclose: 1. the facts recorded in the Iraq File Note; 2. that Leighton Offshore Pte. Ltd. ("Leighton Offshore"), a subsidiary of Leighton, had won a US$733 million contract in Iraq by paying a subcontractor about US$87 million, which was more than twice the real value of the work being performed by that subcontractor; 3. that Leighton Offshore had an opportunity to negotiate a US$500 million extension to the Iraq Phase 1 Contract, but in order to win that extension it would be required to pay US$50 to 60 million to the same subcontractor, which was more than twice the real value of the work to be performed by that subcontractor; and 4. that the payment and proposed payment to the subcontractor were, or may be, unlawful. 1. Chubb has filed a NOC repeating the grounds in AIG's NOC. 2. Catlin has filed a NOC repeating the grounds in AIG's NOC and also contending that CIMIC could have notified the 2010 Insurers under cl 5.1 as it had the requisite subjective state of mind. 3. Liberty has filed a NOC repeating the grounds in AIG's NOC and also contending, as in the Zurich Appeal, that the primary judge's order that it was not liable to indemnify CIMIC be affirmed on the further ground that its liability was already exhausted. The Chubb Appeal 1. Chubb appeals against the finding that CIMIC was entitled to indemnity from Chubb under cl 5.3 of the 2011 Primary Policy for the AFP Investigation Costs and the ASIC Iraq Investigation Costs notwithstanding that the Limit of Liability under the 2010 First Excess Policy Leighton held with Chubb ("Chubb's 2010 First Excess Policy") had been exhausted ("Chubb Appeal"). 1. Challenges are also made to the exercise of discretion as to costs. The policies of insurance 1. The parties' Agreed List of Issues to be determined on the appeal (see below at [25]) refer to the following clauses of the 2010 and 2011 Policies. The wording of those clauses was common to all policies, although there was a different Continuity Date for Catlin's 2011 First Excess Policy ($10 million in excess of the primary cover of $30 million) than for the other policies. In Catlin's 2011 First Excess Policy, the Continuity Date was 30 June 2011. In the other policies the Continuity Date was 30 June 2005. 2. Clause 1.2 provided that the Insurer would pay the Loss of each Company arising from a Securities Claim. A Securities Claim was defined as follows: "4.32 Securities Claim (i) any written demand or civil, criminal, or arbitration proceedings (ii) any administrative or regulatory proceeding also commenced and continuously maintained against an Insured Person: alleging a violation of any laws (statutory or common), rules or regulations regulating Securities, the purchase or sale or offer or solicitation of an offer to purchase or sell Securities, or any registration relating to such Securities: (a) brought by any person or entity alleging, arising out of, based upon or attributable to the purchase or sale, or offer or solicitation of an offer to purchase or sell any Securities of a Company; (b) brought by a Security holder of the Company with respect to such Security holder's interest in Securities of such Company; or (c) brought derivatively on behalf of a Company by a Security holder of that Company; seeking compensation or other legal remedy against any Company for a specified Wrongful Act." (Emphasis in original.) 1. As defined, Loss included any amount an Insured was legally liable to pay resulting from a Claim and Defence Costs. The latter included reasonable expenses incurred with the Insurer's written consent in defence or settlement of a claim. 2. Clause 3.2 relevantly provided: "3. Exclusions The Insurer shall not be liable under any Cover or Extension for any Loss: … 3.2 Prior Claims and Circumstances subject to Section 5.3 ('Continuity'), arising out of, based upon or attributable to: (i) facts alleged or the same or related Wrongful Act(s) alleged or contained in any Claim which has been or could have been reported or in any circumstances of which notice has been or could have been given under any policy of which this policy is a renewal or replacement or which it may succeed in time; or". (Emphasis in original.) 1. Clauses 5.1, 5.3 and 5.4 relevantly provided: "5.1 Notification of Claims and Circumstances The Covers provided under this policy are granted solely with respect to Claims first made against or by an Insured during the Policy Period, or applicable Discovery Period, or accepted as such in accordance with Section 5.4 ('Related Claims or Circumstances'), only if such Claims have been notified to the Insurer as soon as practicable, after the Policyholder's Risk Manager or General Counsel (or equivalent position) first becomes aware of such Claim, but in all events no later than either: (i) during the Policy Period or applicable Discovery Period; or (ii) within 60 days after the end of the Policy Period or the applicable Discovery Period, as long as notice is given to the Insurer within 60 days after such Claim was first made against an Insured. Any Insured may, during the Policy Period or applicable Discovery Period, notify the Insurer of any circumstance reasonably expected to give rise to a Claim. The notice must include the reasons for anticipating that Claim, and full relevant particulars with respect to dates, the Wrongful Act (if applicable) and the potential Insured and claimant concerned. The details of any other insurance policy which may apply to any Loss covered under this policy shall be reported to the Insurer within a reasonable time of any Claim notification. All notifications relating to Claims or circumstances must be in writing or sent by facsimile to the address in Item 13 of the Schedule. … 5.3 Continuity Notwithstanding Exclusion 3.2 ('Prior Claims and Circumstances'), cover is provided under this policy for any Claim, or circumstance, which could or should have been notified under any earlier policy, provided always: (i) the Claim, or circumstance, could and should have been notified after the Continuity Date; and (ii) the Claim shall be dealt with in accordance with all the terms, conditions, exclusions and limitations of the policy under which the Claim, or circumstance, could and should have been notified. 5.4 Related Claims or Circumstances If a Claim or circumstance is notified under this policy, then any subsequent Claim, alleging, arising out of, based upon or attributable to the facts or Wrongful Act alleged in that Claim, or described in that circumstance, shall be deemed to have first been made at the same time as that Claim was first made or that circumstance notified, and notified to the Insurer on the date the notices were first provided. …". (Emphasis in original.) 1. Clauses 7.1, 7.3 and 7.4 provided: "7.1 Non-Rescindability This policy is not avoidable or rescindable in whole or in part and the Insurer shall have no other remedy with respect to any pre-inception misrepresentation or pre-inception non-disclosure by any Insured in connection with this policy, except with respect to Insurance Cover 1.2 ('Company Securities'). If the Insurer has a right to reduce its liability under Section 28(3) of the Insurance Contracts Act 1984 (Commonwealth) for any fraudulent misrepresentation or fraudulent non-disclosure of a matter or fact established by final adjudication of a judicial or arbitral tribunal, or any formal written admission by or on behalf of any Insured, the Insurer will only exercise such right against that Insured. … 7.3 Severable Nature of the Policy This policy covers each Insured for its own individual interest. No statements made by or on behalf of an Insured or breach of any term of this policy, or any information or knowledge possessed by an Insured, shall be imputed to any Insured for the purpose of determining whether any individual Insured is covered under this policy. With respect to Cover 1.2 ('Company Securities'), only the statements and knowledge of any Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or Chief Legal Officer/General Counsel (or equivalent positions) of a Company will be imputed to all Companies. 7.4 Changes in Risk For any United States Securities and Exchange Commission registration or reporting obligation first attaching during the Policy Period, this policy shall not cover any Claims with respect to any Securities Claims brought within or maintained within the jurisdiction, or based upon any laws of, the United States of America, its territories or possessions, unless the Policyholder has given to the Insurer notice of any such registration or reporting obligation and the Insured has accepted whatever terms, conditions and limitations the Insurer deems appropriate to the policy. This General Provision 7.4 will not apply to Securities purchased or sold pursuant to Rule 144A of the Securities Act of 1933 (US)." (Emphasis in original.) 1. As defined, Claim included: "(i) (a) a written demand, or a civil, regulatory, mediation, administrative or arbitration proceeding including any counter-claim, seeking compensation or other legal remedy; (b) a criminal proceeding; or (c) any Securities Claim; made or brought against an Insured alleging a Wrongful Act". 1. An Insured Person included Leighton and its subsidiaries and their directors and officers (cll 4.6, 4.15, 4.16). 2. At the inception of the 2011 Policies, ss 21, 28 and 54 of the Insurance Contracts Act provided: 21 The insured's duty of disclosure (1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that: (a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or (b) a reasonable person in the circumstances could be expected to know to be a matter so relevant. (2) The duty of disclosure does not require the disclosure of a matter: (a) that diminishes the risk; (b) that is of common knowledge; (c) that the insurer knows or in the ordinary course of the insurer's business as an insurer ought to know; or (d) as to which compliance with the duty of disclosure is waived by the insurer. (3) Where a person: (a) failed to answer; or (b) gave an obviously incomplete or irrelevant answer to; a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter. … 28 General insurance (1) This section applies where the person who became the insured under a contract of general insurance upon the contract being entered into: (a) failed to comply with the duty of disclosure; or (b) made a misrepresentation to the insurer before the contract was entered into; but does not apply where the insurer would have entered into the contract, for the same premium and on the same terms and conditions, even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into. (2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract. (3) If the insurer is not entitled to avoid the contract or, being entitled to avoid the contract (whether under subsection (2) or otherwise) has not done so, the liability of the insurer in respect of a claim is reduced to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made. … 54 Insurer may not refuse to pay claims in certain circumstances (1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act. (2) Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim. (3) Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act. (4) Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act. (5) Where: (a) the act was necessary to protect the safety of a person or to preserve property; or (b) it was not reasonably possible for the insured or other person not to do the act; the insurer may not refuse to pay the claim by reason only of the act. (6) A reference in this section to an act includes a reference to: (a) an omission; and (b) an act or omission that has the effect of altering the state or condition of the subject‑matter of the contract or of allowing the state or condition of that subject‑matter to alter. The issues to be determined and the structure of this judgment 1. Helpfully, the parties provided the Court with an Agreed List of Issues arising on the appeal. All parties' oral submissions were framed by reference to the Agreed List of Issues. The Agreed List of Issues was as follows: 1. Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act? 2. Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy's limit of liability (as reduced by amounts previously paid) applies to CIMIC's claims? 3. What is the proper construction of cl 3.2(i) of the 2011 Primary Policy? 4. What is the proper construction of cl 5.1 of the 2010 Primary Policy? 5. If cl 5.1 is to be construed as contended for by Berkley, on the primary judge's findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy? 6. Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers? 7. Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act? 8. Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers, the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful? That issue contains the following sub-issues: 1. Should the primary judge have found that the representations recorded in the Iraq File Note were true? 2. Did the primary judge err in concluding that there was insufficient evidence of "corrupt payments to win the Iraq work"? 3. Did the primary judge err in relying upon the transcript of Mr Savage's compulsory ASIC examination in the manner described at J[262]? 4. Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful? 5. Did the primary judge err in concluding there was "no evidence" that Unaoil paid money to the SOC or that Leighton was aware of Unaoil's retainer of Mr Oday? 6. Did the primary judge err in concluding that the arrangements between Leighton and Unaoil provided Leighton with "commercially justifiable advantages"? 7. Did the primary judge err in failing to find that the purpose of the liquidated damages clause agreed between Leighton and Unaoil was to ensure Unaoil (erroneously written as Leighton in the Agreed List of Issues) was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract? 8. Did the primary judge err in concluding that no part of the US$65 million increase in Leighton's revised tender price had not been demonstrated to directly relate to improper payments? 1. Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified of the Iraq File Note under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified under cl 5.1 and/or s 40(3): 1. of the existence or occurrence of the facts recorded in the Iraq File Note and/or that CIMIC and/or Mr Savage reasonably believed or believed that those facts existed or had occurred; 2. that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, won a US$733 million contract in Iraq by paying a subcontractor about US$87 million, which was more than twice the real value of the work being performed by that subcontractor; 3. that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, an opportunity to negotiate a US$500 million extension to the Iraq Phase 1 Contract, but in order to win that extension it would be required to pay US$50 to 60 million to the same subcontractor, which was more than twice the real value of the work to be performed by that subcontractor; and 4. that the payment and proposed payment to the subcontractor were unlawful or may be unlawful and/or that CIMIC and/or Mr Savage reasonably believed or believed that to be the case? 1. Did the primary judge err in identifying the retention applicable to CIMIC's claim against the 2011 Insurers? 2. Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re? 3. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers based on the pleadings against them? 4. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact? 5. Did the primary judge err in making the 2010 Declaration against Arch and Dual based on her Honour's findings and the failure to deal with the submission summarised at J[623]? 6. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers on the grounds that the 2010 Declaration was hypothetical, lacked utility (including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late for it to do so), was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy? 7. Did the primary judge err in exercising the costs discretion? 1. Logically, Issues 6, 7 and 8, which concern the primary judge's factual findings as to alleged misrepresentations and non-disclosure by Leighton prior to the inception of the 2011 Policies, should be addressed first and before the issues of construction and challenges to the declarations the primary judge made. After summarising the factual background, we will deal with those issues first (see below at [113]ff). 2. There is a further issue not raised directly in the Agreed List of Issues which also requires determination. It is Berkley's claim that it was procedurally unfair to include it in the 2010 Declaration. Normally this issue would be determined at the outset: see eg Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 at [9]; Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 at [36]. This, however, is an exceptional case, as is reflected in the substantial number of parties involved and the wide and diverse range of issues requiring determination. Accordingly, we will address the procedural fairness complaint after resolving all the other issues. Fact finding on appeal 1. As is readily apparent, numerous factual issues are raised by the parties' contentions. This is an appeal by way of rehearing. We are bound to conduct a real review of the evidence given at first instance and of the primary judge's reasons for judgment to determine whether the primary judge erred in fact or law: Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 at [43]. Notwithstanding CIMIC's submission to the contrary, this Court is in as good a position to determine what inferences should be drawn from facts which are undisputed or which, having been disputed, are established by findings of the primary judge: Warren v Coombes (1979) 142 CLR 531 at 538, 551; [1979] HCA 9 (Gibbs ACJ, Jacobs and Murphy JJ); Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 at [23] citing the Full Federal Court in Cabal v United Mexican States (2001) 108 FCR 311; [2001] FCA 427 at [223]-[224] (Hill, Weinberg, Dowsett JJ). 2. Moreover, we are satisfied that the documentary evidence is not so complex that we are not in a position reliably to draw inferences from that material. As was the case in Yarrabee Coal Company Pty Ltd v Lujans [2009] NSWCA 85 at [3], we were taken exhaustively and meticulously through the relevant evidence in the voluminous written submissions over the four days of the appeal hearing and have had the opportunity for considered reflection. Having said that, as set out by Bell P (as his Honour then was) in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 at [28]-[29] (Bathurst CJ and Leeming JA agreeing): "[28] Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents. [29] Context is critical for at least two reasons. Documents and events take their meaning from context. The context in which events occurred may not necessarily be apparent to a court many years later when hearing a case. …". 1. To the extent that some of the issues depend upon an assessment of both oral and documentary evidence, we are mindful that even where, as here, the primary judge's findings are not based upon credit, they are likely to have been "affected by impressions about the credibility and reliability of the witnesses formed by the trial judge as a result of seeing and hearing them give evidence": Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Bell, Gageler, Nettle and Edelman JJ). We have borne in mind that the primary judge enjoyed an advantage over this Court as regards the assessment of the oral evidence. Summary of factual background 1. Given the extent to which the primary judge's findings of fact are challenged and additional findings are sought, it is necessary to set out in some detail the factual background by reference to the underlying evidence. The evidence summarised below, together with such findings of the primary judge as are not challenged, form the basis of our resolution of the many factual challenges. Operational structure of Leighton 1. In 2009, Leighton was the sole shareholder of six subsidiaries, which together formed the Leighton Group. The subsidiaries were referred to within the Leighton Group as "operating companies." Each operating company was managed by a COO, being the principal executive responsible for the operations and performance of each operating company and who reported directly to the Leighton CEO (Wallace King). One of the operating companies was Leighton International Limited ("LIL"). LIL contained multiple "divisions" or "business units" including Leighton Offshore, which itself had different departments, such as Leighton Offshore Middle East and Leighton Contractors Singapore Pte Ltd ("Leighton Singapore"). We propose generally to refer to Leighton as encompassing its various subsidiaries and divisions, save where we consider it necessary to refer to a subsidiary by name. Leighton's Operations in Iraq 1. Prior to July 2009, Leighton did not have operations in Iraq. In July 2009, LIL (under the direction of Mr Savage) prepared a "Proposal to Enter New Geographic Market". The proposed client was SOC, a subsidiary of the Iraq National Oil Company. As regards availability of subcontractors, this document records that "[t]he proposed work is all offshore and would use international subcontractors brought in with the vessels. There are no plans to use Iraqi subcontractors due to the nature of the work." At this stage, Leighton did not plan to have its own employees or contractors onshore in Iraq and a high level of security was to be arranged for any personnel who visited Iraq. It was recorded that Iraq's "Corruption Perception Index" ranking placed it as the second most corrupt country out of the 180 countries surveyed. Unaoil and Mr Oday 1. An email dated 18 May 2008 sent from Basil Al Jarah to Robert Bald and Ziad Akle, all of Unaoil, records that Mr Al Jarah had had two meetings with Oday Al Quoraishi ("Mr Oday", sometimes referred to as "Ivan"), the Project Manager responsible for liaising "between the [Iraqi] Ministry of Oil and US Gulf Development Projects". The items discussed included a project of which Foster Wheeler was the FEED (meaning the Front End Engineering Design) contractor. It is apparent that this is a reference to the Iraq Phase 1 Project. Mr Oday's involvement in evaluating tenders for this new project is discussed in this email. 2. Approximately one year later, on 17 May 2009, Mr Al Jarah sent an email to Cyrus Ahsani and Mr Akle, again all of Unaoil, with the subject "Ivan Retainer": "Please note I met with Ivan yesterday and I feel we should instigate a retainer for him as discussed. Dated to commence from 1st April '09. I also agreed we cover his hotel in London. Please advice [sic] so Ziad can process it accordingly." 1. Mr Ahsani asked: "What have we agreed on this? ie what is the retainer?" 1. Mr Al Jarah responded: "It is $6000 per month. ($5K for him, and $1k he needs for presents to people within) I think this will only go on as far as we get commitments firmed up and he knows his portion. Similarly if he leaves this position it stops." Iraq Phase 1 Project 1. On 18 December 2009, Leighton Offshore was one of four invitees chosen by Foster Wheeler and SOC to bid for the Iraq Phase 1 Project. One of the signatories to the invitation to bid is Mr Oday, who is formally identified as the SOC "Project Manager" for the Iraq Phase 1 Project. In March 2010 Leighton prepared a PowerPoint presentation entitled "Iraq Crude Oil Export Expansion Project - Bid Review Notes" ("Bid Review Notes"). 2. An email of 4 March 2010 from Fergus Eley, an employee of Leighton Offshore who was involved in preparing tender documents and costings and reported to Mr Waugh and Mr Savage, attaches the Bid Review Notes. One slide headed "Execution Strategy" contains a bullet point "Onshore Scope - Leighton construction supervision with local subcontractor plant/equipment/resources. Minimal site camp presence (sufficient to meet Client requirements and construction supervision)". The Bid Review Notes identify that "local contractors/plant/equipment/materials are available in Basra for onshore works". Under the heading "Security Assessment", there is a logo for "Sentinel Iraq" and it is said that onshore security would be provided by Olive Group and that Sentinel Security Group would fortify the site camp. It is apparent from this presentation that both onshore and offshore work was required for the Iraq Phase 1 Project and that local contractors/plant/equipment/materials were available in Basra for onshore works. 3. On 25 March 2010 Mr Savage sent Leighton's CEO, Mr King, an email attaching a green sheet, which is an internal document summarising the costs comprising the tender price, for the Iraq Phase 1 Project signed and dated by Mr Savage. This has a tender price of US$642,947,122. On 30 March 2010 Leighton Offshore, along with a joint venture partner known as Al Habtoor Leighton Holdings ("HLG"), submitted a bid for the Iraq Phase 1 Project to Mr Oday and Mr Madhi Ahmed Alnabhan Awni, both of SOC. The final green sheet has a tender price of US$633,473,189. Two other tenderers declined to bid at this time, so the only remaining tenderers were Leighton and one other company, Saipem. 4. On 7 April 2010 Mr Waugh met Peter Willimont of Unaoil. Unaoil had originally been the "agent and packager" of another tender invitee who had declined to bid. Mr Willimont wanted to know if Leighton Offshore were interested in a "package proposal" for the Iraq Phase 1 Project onshore works. Mr Waugh says in an email of 7 April 2010 to Gary Schwabe, Strategic Development Manager of Leighton Offshore Middle East, and Mr Eley that he told Mr Willimont that "we were interested but it had to be commercially attractive otherwise we would just stick with doing it ourselves. He certainly has some good contacts and may be useful for other business ops". 5. Following this meeting, on 12 April 2010, Mr Willimont sent an email to Mr Waugh telling him that he was preparing an "onshore pipeline installation package" for Mr Waugh's review. In this email, Mr Willimont says, with respect to "our discussions relating to [Unaoil's] proposal to assist with the award of the contract", Unaoil is "sure we can make a significant difference to [Leighton's] chances of winning and successfully executing this contract". Mr Willimont further explains that Unaoil is one of the few groups that contracts with SOC and so understand "all the approval routes and payment idiosyncrasies of this territory" and has "intimate knowledge of the SOC – Government approval processes relating to this project." Mr Waugh responds to Mr Willimont on 14 April 2010 that he could not make any commitment on the award services proposal but was "looking forward to getting the onshore quote". 6. On 25 April 2010 Mr Schwabe sent an email to Mr Waugh telling him that he has had a discussion with Paul Bond about a "Phase-3 tie up" for the project. It is unclear who Mr Bond is. Mr Schwabe reports that he told Mr Bond that Leighton was "going to win Phase 1 as we have been very aggressive in our strategy to win this project" but that Mr Bond said that he "begs to differ and that we need to "invest" in some more influence via the Unioil [sic] connection". Mr Schwabe says that his impression is that Unaoil may be "courting Saipem very hard as well!" Mr Schwabe says that Mr Bond wants to call Mr Waugh "to convince Leighton that we need to be talking to Unaoil". By reply email of the same date, Mr Waugh responds: "Unaoil may be able to add some value" and that Unaoil are apparently "strong in Baghdad." Mr Waugh continues that Leighton "have Basra covered as well" and expressed his view that he did not think Saipem were interested in Unaoil. 7. On 20 and 21 May 2010 Mr Eley sent emails to Mr Waugh providing a breakdown of onshore works costs for the Iraq Phase 1 Project. In his email of 20 May 2010 Mr Eley says that onshore works costs are $15,340,000 (excluding camp construction, fortification and maintenance which were an additional $8.9 million) and that Unaoil's quantities and schedule are "broadly similar from the comparison we did." Mr Eley refers to "Basra East Options" in the context of discussing workforce and overhead costings. It is proposed that there will be "Leighton construction supervision with local subcontractor/plant/equipment/resources" with "minimal site camp presence". In his email of 21 May 2010, this time also copied to Mr Schwabe, Mr Eley provides a more detailed breakdown of onshore works. He says that the "build-up" for onshore works, including "civil, MEI&P, camp construction and maintenance, onshore and offshore security, onshore materials and transportation", was approximately $42.5 million. Mr Eley suggests that Unaoil's price for the scope of works will need to be around $40 million "for it to be worth our while taking the risk to lock them [Unaoil] in now" and that CIMIC will require a detailed breakdown of Unaoil's security proposal as this is a "major cost component." 8. An email from Mr Waugh to Mr Savage and others dated 23 May 2010 attaches a revised green sheet in which Leighton's bid price for the Iraq Phase 1 Project has been reduced to US$623,650,000. Mr Savage approves the reduced bid price by way of reply email dated 24 May 2010 but adds "[l]et me know when you hear from our "friends"." 9. By email of 25 May 2010 Mr Waugh tells Mr Savage: "I could not get hold of the guy today to find out where he is coming from. We have extension to the bid til 5pm London time Thursday and I am meeting him 11.30am perth [sic] time Wed, so timing should be ok now." 1. Mr Waugh and Mr Willimont met in Perth at 11.30am (Australian Western Standard Time) on 26 May 2010. On the same day, at 5.36pm, Mr Waugh sent an email to Mr Eley, copying Mr Schwabe and another Leighton Offshore employee, asking Mr Eley to urgently prepare an updated green sheet as follows: "1. In the Direct costs, allow an additional USD 20 million for onshore works. This is to allow us sufficient money to go with Unaoil as a package onshore. 2. Please add also into Direct costs, an amount of USD 15 million as a provision for third party vessel for heavy lift. 3. Please adjust the margin percentage to increase margin amount to 88.5 million This should take our price up to around 690 million Please get this greensheet back to me asap." 1. Shortly thereafter, at 6.39pm on 26 May 2010 Mr Waugh emailed Mr Savage: "Old GS (R4) and new (R5) attached. This follows our discussion earlier today. I'll call to discuss in a couple of hours." 1. The green sheet dated 20 May 2010 has a total bid price of US$622,948,318 for the Iraq Phase 1 Project. The green sheet dated 26 May 2010 at 11.57am had a total bid price of US$688,723,797. The total for direct costs has increased by US$35 million exactly. This reflects an increase of exactly US$15 million for "Plant" and US$20 million for "Subcontract". The figure for "Markup" has increased from US$58,424,521 to US$88.5 million. Overall "mark up" has increased from 13.24% to 18.58%. These changes correlate with the figures referred to in Mr Waugh's email of 26 May 2010 to Mr Eley and Mr Schwabe. The total increase in bid price is just under US$65,775,479. 2. In further emails between Mr Waugh and Mr Savage on 26 May 2010: 1. Mr Savage notes that "the increase is $66m" comprising "30m margin", "15m subcon ork", "15m Iraq subcon", and "6m ????what is it?"; 2. Mr Waugh replies that it is "20 mill Iraq subcon" and "we would commit to package up all the onshore work into one scope and award this to a nominated subcon which would include all the allied support." According to Mr Waugh, the $20 million is "partly indirect costs (60%) for onshore and partly direct cost for them to do it being more than our in house estimate (40%)". He continues that the other million is just "CV related items (BG's, fees, etc)." He explains that he had thought we would get "them", being Unaoil, down to $15 million, but their pricing is $25 million more than what was already in the Leighton bid for onshore work, and Mr Waugh did not think he could get them down by more than $5 million; and 3. Mr Savage responds "ok". 1. Shortly after this, Mr Waugh and Mr Willimont drafted a proposed MOU between Leighton and Unaoil. On 28 May 2010 at 10.07pm Mr Al Jarah sent an email to Mr Waugh, copied to Mr Willimont, with the subject "MOU agreement in Perth": "In my communications with Peter, I believe all has gone well and much has been agreed, including our price reduction. Our Iraqi Principle [sic] has instructed Peter to stay in Perth to close the MOU and come back with a signed copy. The finer details may be filled in later. … Kindly do all you can to expedite closure to keep all sides happy." 1. There are emails between Mr Willimont and Mr Waugh on 28 and 29 May 2010 about the proposed MOU. An email from Mr Willimont to Mr Waugh at 3.57am on 28 May 2010 says that art 2.7 (at that time the liquidated damages provision) is "very important in allowing our groups [sic] position to be cryistal [sic] clear going forward. Your legal guys will probably have a combined heart attack at this clause". He explains that he needs "to report back to "all" concerned on progress" and says "I am sure in the long run it will be benifitial [sic], maybe a little hard to explain the [sic] the family…". He proposes a draft liquidated damages provision, leaving the actual sum to be paid as liquidated damages unspecified. 2. Internal emails within Unaoil on 29 and 30 May 2010 include the following: 1. On 29 May 2010 Mr Al Jarah reports that he had a long conference call with Mr Oday (who is referred to as Ivan in this correspondence). Mr Al Jarah reports that evaluation is not yet complete by "FW" (presumably Foster Wheeler) between "L&S" (presumably Leighton and Saipem). Mr Al Jarah identifies that "L [presumably Leighton] is hovering around 20% cheaper." It is agreed that Mr Oday will call "R" (presumably Mr Waugh) and hint that "although it's looking good ([w]e are sure he has an idea via FW leak) … the knives started to come out in the Ministry, there are certain elements in Baghdad have already started questioning L's track record and experience to take on such an important contract". Mr Al Jarah says that "Ivan [Mr Oday] will also hint that even if R [Mr Waugh] has people in Baghdad, he should contact Basil [Mr Al Jarah] and get his people to provide support and protection." Mr Al Jarah says: "SOC DG Mr. Diaa…explained latest position and indications [sic] that L maybe considerably cheaper. There was some surprise around, But mostly muted...I do believe The resistance will start, though with such price difference it will be futile. But in Iraq you never know." 1. Mr Al Jarah says in an email of 29 May 2010 that "Ivan [Mr Oday] is keen we win the land portion, as he feels sorry that we struggled and have nothing to show for it. First backed M then S [presumably McDermott, one of the tender invitees that withdrew, and Saipem]. I promised him a treat in Istanbul on 21st when he meets FW to finalize the EPC [Engineering, Procurement and Construction] package". 2. Mr Willimont reports that there was a discussion between Mr Waugh (from the airport) and Mr Willimont early on 30 May 2010 during which Mr Waugh agreed to revert on the MOU shortly. Mr Willimont says that "he was pushing that we now really support his position, my answer was obvious we need the deal". It also sets out that Mr Waugh "did not go in at 750…closer to 700…he was very worried about explaining the rise". Mr Willimont adds "my opinion is that we will get a deal out of [R]ussell, he is to [sic] scared not to give it to us…I told him we will we need the deal…the real hard work is yet to come…we need to keep the pressure on." 3. In an email from Mr Al Jarah to Mr Willimont and others at Unaoil dated 30 May 2010, Mr Al Jarah reports that Mr Oday had a discussion with Mr Waugh, during which Mr Oday relayed to Mr Waugh the "agreed message about knives coming out". He adds that Mr Waugh is "concerned about getting enough help at the Ministry. He always wants assurance that we carry enough clout. It was confirmed to R [Mr Waugh] that we [sic] the right people". Mr Al Jarah says that he has discussed with Mr Oday "ways to increase L's [Leighton's] price through variation orders and requests by the client for increased scope". He says "Ivan [Mr Oday] stated that R [Mr Waugh] has left no room in his offer for such plan of action…he has already said yes to everything and no caveats to fall back on…dozy sod…unlike S [presumably Saipem]…In any case, it has given us food for thought, to look for some irrelevant extras to be requested that provides L with a vehicle to increase his price…On the understanding we get the price we want in return. We both went away to look for what to ask…I think R needs hand holding through this exercise otherwise he may give everything for free". 1. An MOU between Leighton Singapore (a division of Leighton Offshore) and Unaoil signed by Mr Waugh and dated 31 May 2010 (but likely executed some time in mid-June 2010) includes a term that Leighton and Unaoil agree to enter a subcontract for an "all inclusive" price of US$65 million but recognise that this price may need to be reduced in line with Leighton's "execution plan". Article 2.12 provides that the parties agree "to give their full support and benefit of their resources to the objective of achieving award of the PROJECT to LEIGHTON by the CLIENT. Any costs incurred in achieving this objective are at the sole risk and expense of the Party incurring or committing to the cost." The MOU includes the following: "ARTICLE 8 - LIQUIDATED DAMAGES FOR FAILURE TO AWARD SUBCONTRACT 8.1 If LEIGHTON is awarded the contract for PROJECT by the Client [SOC], and LEIGHTON does not subsequently award a subcontract to UNAOIL pursuant to the terms of this MOU, LEIGHTON shall pay to UNAOIL liquidated damages in the amount of USD15 000 000 [fifteen million US dollars]." (Emphasis in original.) 1. The MOU also includes, at art 9, an agreement that "If LEIGHTON fails to award a subcontract to UNAOIL, then notwithstanding and without prejudice to LEIGHTON's obligation to pay liquidated damages to UNAOIL in accordance with Article 8, UNAOIL will assist LEIGHTON with the successful execution and completion of the PROJECT for the CLIENT [SOC] and shall": 1. Provide local knowledge and advice on the preferences of SOC, its partners, the government and governmental agencies. 2. Assist in arranging meetings and maintaining relations with SOC, its partners, the government, governmental agencies and any other business representatives that are deemed desirable for the satisfactory completion of Leighton's contract. 3. Ensure Leighton is kept appraised of all requirements SOC may have in relation to the execution of the contract. 4. Provide feedback on and monitoring of the performance of SOC, its partners and others during execution to ensure a successful contract execution. 5. Provide assistance on possible change orders and guidance relating to invoicing procedures and billing issues if needed. 1. By email dated 4 June 2010 from Mr Willimont to Mr Waugh, copying Mr Al Jarah and other Unaoil employees, Mr Willimont tells Mr Waugh that "[w]e need to support your position to award as we discussed recently and to do this in an effective manner we need an MOU (agreement) in place" within the next 24 hours. Mr Waugh replied to Mr Willimont saying that he understood Mr Willimont's "desire to put 20 mill in the LD [liquidated damages] clause" but requested that he accept $15 million. Mr Waugh added: "When I explained this Ld clause to my boss (not so easy!) I told him it would not exceed 15. I did this on the basis you would want to cover 12 and I gave myself a bit of buffer to 15, but 20 is a bit hard to explain now." 1. An email from Mr Eley to Mr Waugh dated 13 June 2010 refers to various changes having been made to the MOU since he had last seen it, including that the performance bond had been reduced from 10% to 7.5% (and it is 7.5% in the version signed by Unaoil and dated 31 May 2010) and that art 8 (an additional liquidated damages provision) and art 9 had also been added. Mr Eley wrote: "Can we not just pay Unaoil $15m for these "assistance" services and execute the project as planned (this being a fall-back if scope cannot be suitably agreed)". 2. As the primary judge found at J[47], on 15 June 2010 SOC issued an invitation to Leighton Offshore and Saipem to provide further updated tenders to account for further changes in the scope of works. On 22 June 2010 Leighton Offshore submitted its revised fixed sum bid price of US$763.2 million. This was significantly lower than its competitor, whose tender price was US$977.8 million. 3. On 17 June 2010 an email chain between Mr Eley and Mr Waugh indicates that Unaoil had prepared a further draft MOU but that the real issue was "their position on change of price". Mr Eley's position was that there were "no real claimable price increases for Unaoil other than the new Addendum 4, that they shouldn't have already had in their MOU price." Mr Waugh responds that he would "handle this direct with Unaoil." 4. An MOA between Leighton and Unaoil dated 26 June 2010 and signed on about 30 June 2010 increases the "all inclusive" price for Unaoil's subcontract from US$65 million to US$77.5 million and increases the amount of liquidated damages from US$15 million to US$25 million. The MOA also includes an amended form of art 9 in which the chapeau provides "If LEIGHTON does not subsequently adhere to the terms of this MOA and is accordingly in breach hereof" in place of the previous words "if LEIGHTON fails to award a subcontract to UNAOIL," but keeps the scope of services that will then be provided by Unaoil unaltered. 5. By email of 5 July 2010 at 5.14am Mr Savage asks Mr Waugh to send him the final version of the green sheet for the Iraq Phase 1 Project. Mr Waugh emailed this attachment at 12.43pm on the same day and asks Mr Savage to "sign off and get LHL to sign off". It appears that Mr Savage was in a different time zone as he replies by email of 5 July 2010 timestamped at 8.22am asking: "Which section is the USD15m in?" 1. Mr Waugh responds at 12.51pm on 5 July 2010: "It's in Directs. There is a cost for Heavy Lift Vessel of 15 million". 1. Also on 5 July 2010, at 9.04am, Mr Savage sent an email to Laurie Voyer, CEO and Managing Director of HLG, attaching a document described as the "Iraq HLG Fee Calculation". Mr Savage explains in the covering email that "we [Leighton] have large risk and fee items in the Iraq bid" and "a 5% fee on contract value is out of whack." Thus he proposes a fee of 5% "of the direct costs and the overheads bid into Iraq" which equates to 3.1% of the contract value. He also explains that: "(I have added the USD15m fee we agreed with our friends back into mark-up)". 1. A comparison between the Iraq HLG Fee Calculation and the green sheet dated 26 May 2010 demonstrates that: 1. they both have the same bid price, US$688,723,797; 2. the total for direct costs in the HLG Fee Calculation is US$461,422,129, which is US$15 million less than the figure of US$476,422,129 in the green sheet; and 3. the total for markup in the HLG Fee Calculation is US$103.5 million which is US$15 million more than the figure in the green sheet of US$88.5 million. 1. By email dated 27 July 2010 Mr Waugh reports to Mr Savage: "Some positive movement today on Iraq Oday has now comnpleted [sic] 3 days of discussion with Ministry and is on his way back to Basra. Will not get confirmation til tomorrow, but likely this means he has verbal sanction from Ministry to proceed. Expectation is Ministry will take a week to put that in writing, then SOC can start contract discussions with us so there is hope for a mid Aug conclusion rather than late Aug Other good news is that Oday seems to have been successful in getting our advance raised to 20% and the LC [Letter of Credit] back to one single LC for full CV." 1. On 4 August 2010 Mr Waugh sent an email to Mr Oday's personal email address forwarding him an email from Ramjee Iyer of Oceanking about the Iraq Phase 1 Project. 2. On 1 September 2010 Mr Al Jarah sent an email to Mr Waugh telling him that he has followed Mr Waugh's "two day meeting in Istanbul with interest…You may also be aware this meeting was a formality…decision was already made last Thursday to proceed with Leighton." 3. On 2 September 2010 Mr Waugh had an email exchange with Mr Willimont in which Mr Willimont tells Mr Waugh "Mtg in ministry – they are looking for a bigger discount" and Mr Waugh responds "Need you to cut this off. We don't have more to give and they need to understand that." 4. There is then an email exchange on 7 and 8 September 2010 between Mr Al Jarah and Mr Willimont, copying other Unaoil employees. On 7 September 2010 Mr Al Jarah informs the others that "FW/SOC" had just completed a two-day evaluation of bidders and informed them of key points from that evaluation. Mr Al Jarah, on 8 September 2010, sent an email asking Mr Willimont to ask Mr Waugh (described as "R") to submit his paperwork to "SOC/FW" today if possible as they needed "to get these at the Ministry before LOI can be issued". Shortly after this Mr Al Jarah sent a further email saying: "R is an idiot and naïve, Why tell Ivan he already knew "approvals left the Ministry with no more reductions"?? Now we have a serious issue with Ivan who stopped co-operating with us. Just for the record, this job is difficult enough without adding to our woes. Without Ivan's help on the ground, which was coming free we could have trouble". 1. Mr Willimont responded: "I can understand that Russell should keep his mouth shut – the info I gave him as always was confidential…Why is Ivan getting pissed off, if he is with Russell, as you have told me…what does he care, unless he was using this info himself with Russell to enhance his own position, which is likely is it not." 1. Mr Al Jarah responded that it is Unaoil who had told Ivan of developments at the Ministry and that: "I am sure Ivan has his own Agenda, He is probably using this opportunity to squeeze R further to his gain...And feels now we spoiled his parade. Ivan has gone in his shell which worries me considerably." 1. Mr Willimont responded that: "Ivan may have told you to keep it quiet – but you told me last night no problem to tell Russell, in fact the sooner the better so he did not hear it from anyone else…(Ivan)…we rained on his parade did we not. The best medicine for a calm life is a dose of George Washington…why not?? We got a little bit more off of Russell and we need Ivan on the CMMP!!" 1. Mr Ahsani, who had been copied on the emails, responded to this email chain: "Although of course I know this is not the case here, the way you write your emails may give rise to questions. Pls. we have all accepted our Code of Conduct and should not give the impression in any correspondence that we are acting otherwise." 1. On 8 September 2010 Leighton and Unaoil entered into a Supplementary Agreement, amending the MOA dated 26 June 2010 to increase both Unaoil's "all inclusive price" and the liquidated damages figure by US$1 million. 2. On 23 September 2010 Mr Willimont sent an email to Mr Waugh letting him know that the "letter of award was signed by the Oil Minister today". Mr Waugh responded "Super!" 3. On 30 September 2010 Mr Savage sent an email to Mr Waugh referring to a presentation by Mr Eley, given on 29 September 2010, breaking down the figures for the final bid on the Iraq Phase 1 Project and asking Mr Waugh four questions including "is the USD15m in the agency number?" Mr Waugh responds that the "USD15M" is in "directs, bearing in mind it is now USD10." 4. On 8 October 2010 Mr Savage sent an email to Mr Waugh: "You need to have a final green sheet ready for next week. Obviously we need everything in the "right" place." 1. On 9 October 2010 Mr Eley sent an email to Mr Waugh and two others which referred to changes that he had made as requested: "2. Leighton Vessel costs are now allocated under Indirects: a. Stealth…. b. Mynx… c. Eclipse… 3. In the direct cost, we had $15m for 'heavy lift vessel', the distribution of this is now be [sic]: a. "Import/Export & License Fees" (5m) b. "Heavy Lift Vessel" (10m)". 1. Mr Waugh replied on 10 October 2010 asking Mr Eley to please "get the value to match exactly to 733 million. Stick any balancing in tender costs or GMC if needed." On 11 October 2010 Mr Waugh sent a revised green sheet, dated 10 October 2010, to Mr Savage and Eric Wardle, the COO of LIL. Mr Waugh's covering email explains that agency and support costs were now distributed in directs and marked up and Stealth, Mynx and Eclipse extracted to directs "(so we can see them, but also so that I maintain the correct margin and a reasonable % margin)." On this green sheet the total bid price was US$733 million. Each of "Leighton Stealth", "Leighton Mynx" and "Leighton Eclipse" had separate entries under the heading "Indirect Costs". 2. Mr Savage replied the same day asking "[t]he 15m (now 10) is buried in the directs?" to which Mr Waugh replied "yes". 3. On 13 October 2010 Leighton Offshore presented its final tender offer, after further negotiations with SOC, at US$733 million. On the same day Mr Waugh emailed Mr Oday at his private email address. In this email he tells Mr Oday what Leighton's preferred position is on letters of credit, bank guarantees and payment milestones. He then asks: "4. Unaoil – is this all approved now? FW [Foster Wheeler] still asking lots of questions." 1. Mr Oday replies as to this: "we will take care of this matter meanwhile kindly answer the questions which seems v.normal to me …". 1. On 23 October 2010 Leighton Offshore entered into a US$733 million contract with SOC ("Iraq Phase 1 Contract"). An announcement was made to the ASX on 25 October 2010. Leighton Offshore entered into a subcontract agreement with Unaoil on 8 December 2010 in respect of the Iraq Phase 1 Project. Iraq Phase 3 Project 1. On 1 November 2010 invitations were issued to bid for a crude oil export facility reconstruction project, known as the "Iraq Phase 3 Project", which was sometimes referred to as "JICA". On the same day Mr Waugh emailed Mr Willimont saying: "I see the JICA bid is out. Does that impact our discussions?". Mr Waugh responded the following day saying: "When is the earliest we can meet in a sensible location … to work out JICA?". 2. The primary judge found at J[227] that Mr Waugh was hopeful Leighton could win the Iraq Phase 3 Project by way of an extension to the Iraq Phase 1 Contract, rather than bidding for a new tender, and that: "On 22 November 2010, Mr Waugh wrote a letter to the Minister of Oil asking to negotiate the Phase 3 work as a variation to the current Phase 1 Contract "to save cost, reduce risks and deliver an improved schedule performance". It appears that, on 23 November 2010, Mr Waugh also met with representatives of the Ministry of Oil in Baghdad. There is no evidence whether Unaoil was involved in that meeting." 1. It is apparent that Mr Waugh was told about the meeting in Baghdad with the Iraqi Minister for Oil on 20 November 2010, and that the meeting was arranged for 23 November 2010. He notified Mr Savage of the proposed meeting on 21 November 2010. The email from Leighton Offshore to arrange visas for the meeting was addressed to Mr Oday. A MOA between Unaoil and Leighton was emailed by Mr Willimont to Mr Waugh on 27 November 2010 proposing an "all inclusive" subcontract price of US$75 million which was subsequently reduced to US$55 million in April 2011. On 30 November 2010 Mr Waugh was told by Sameh Ali, General Manager of Leighton Offshore, that HLG was visiting the Iraqi president and prime minister and asked if he and his colleagues could "convey a message from LO [Leighton Offshore] to the Iraqi officials". Mr Waugh forwarded this email to Mr Savage as an "FYI". Mr Savage responded: "I was aware of this …. This meeting is arranged through another agent. You should let Unaoil know, so that no one gets upset! …". 1. Mr Waugh responds that he will "certainly let Unaoil and Oday know". 2. Mr Waugh's attempt to obtain the Iraq Phase 3 Project as an extension of or variation to the Iraq Phase 1 Contract was ultimately unsuccessful. 3. On 18 April 2011 Leighton Offshore submitted its bid for the Iraq Phase 3 Project and, on 13 October 2011, it was awarded a US$518,157,000 contract ("Iraq Phase 3 Contract"). This was announced to the ASX on 14 October 2011. The Iraq File Note 1. The full text of the Iraq File Note, written by Mr Stewart, is set out below. We have added agreed definitions in square brackets: "Iraq Project Discussion File Note 23/11/10 Meet D.G. Savage Advised me that he has an opportunity to negotiate a US$500 extension/variation to the current contract in Iraq but it will require a payment to a 3rd Party N.S.C. [nominated subcontractor] who will do all onshore works. The payment for the N.S.C [nominated subcontractor] for onshore work is $50-$60 Mill. D. Stewart asked what is the real value of the work & he said < 50% of the payment. I asked [him] how we won the current $720 contract & he says it was won by a $87 Mill payment to a N.S.C [nominated subcontractor] on the same terms. I asked did WMK [Mr King] approve this & he said yes. I said I will talk to WMK & he said that WMK will now deny it or have 'forgotten it'. I said I understand the concept & it is exactly what got the AWB [Australian Wheat Board] into trouble with their trucking contract at 2 – 3 x Market Rate. I asked what Foster Wheeler think about it? I asked who negotiated it? He said Russell Waugh. I said I will talk to Wal [Mr King] and he said No. I said I will think about it & that I am not comfortable but understand the plan. I asked how we pay & he said proportional to our payments. _______ Thought about it, talked to WJW [Mr Wild] & we agreed to tell David [Savage] we do not agree & if we can't win without this we don't want the job. _______ Tried to call @ 6.05. Left a message to call me about Iraq. Call again @ 6.25pm. Spoke to DGS [Mr Savage] & made it clear that I was not comfortable with the arrangements & that if he can't win without this, then we don't want the work. WMK [Mr King] is still the CEO & if he is O.K. with it, then go for it but be aware I will not support it. I told him I fully understand the concept & the fact we have been introduced to this "N.S.C" [nominated subcontractor] by the client but it is too much money & a clear lack of value for money & we should not do it. _______ D.G.S. [Mr Savage] said that R.W. [Russell Waugh] was in Bagdad [sic] now & meeting with the Minister PTO to try to negotiate this job. DGS [Savage] says he will ring Russell [Waugh] & talk to him. D Stewart says that WMK [Mr King] is still CEO & if he is O.K. with it go for it but he has to approve it & I will not ask Wal [King] about the current job." Witness evidence about the Iraq File Note 1. As set out below, there is no challenge to the primary judge's findings at J[318], including that Mr Stewart did not know whether what Mr Savage was saying was true or not. As relevant to other factual issues, Mr Stewart's evidence as to the Iraq File Note included the following: 1. He signed the green sheet on about 29 March 2010 and was aware that the tender price was revised and resubmitted but was not involved in the Iraq Phase 1 Project after signing the green sheet. 2. Some of the text in the Iraq File Note was written during one face to face and one telephone conversation with Mr Savage and the balance was made shortly afterwards. The Iraq File Note was not a verbatim record of the two conversations he had with Mr Savage and he could not now recall the exact words used by Mr Savage or himself during those two conversations. He believed that the Iraq File Note recorded, broadly speaking, the effect of what was said during the conversations. 3. He wrote the file note because he was concerned about what had occurred between him and Mr Savage in their discussions on 23 November 2010 and he wanted to make an accurate record of what transpired to protect himself against allegations that might be made. 4. He understood Mr Savage to be telling him that $87 million had been paid to an "N.S.C" for the Iraq Phase 1 Project when the real value of the onshore works was less than 50% of the value of the payment. Mr Stewart understood that the purpose of the payment was illegitimate, that the overpayment Mr Savage described was an improper inducement or improper payment made so that Leighton Offshore would win the Iraq Phase 1 Contract and was illegal. He understood that what Mr Savage was describing "clearly" amounted to an overpayment to a subcontractor. If true, that would "absolutely" have been a breach of the Leighton Code of Ethics as at 2010. 5. He understood "nominated subcontractor" to mean an entity appointed by the principal on a job to do subcontracting work and that the nominated subcontractor has a relationship of some kind with the principal. He did not know what the nominated subcontractor was going to do with the money and he did not understand where the money was to go to other than to the nominated subcontractor. Mr Savage did not tell him and they did not discuss it. 6. He could not recall if he told William Wild, a COO and later deputy CEO of Leighton, that a bribe had been paid in respect of the Iraq Phase 1 Project. He did not recall the exact words he used in his conversation with Mr Wild after his conversation with Mr Savage. 7. He agreed that what he said to Mr Savage was that he understood the concept and that it was exactly what got the Australian Wheat Board ("AWB") into trouble with their trucking contract at two to three times market rates, that that trouble was legal trouble, that several directors of AWB had been prosecuted by ASIC, that that had also led to claims against the company, that what he was saying is that he understood that the overpayment was an improper inducement or improper payment that would be made so that Leighton Offshore would win the Iraq Phase 3 Contract, and that he understood the concept was an illegal one. He said he understood the AWB issues and "it seemed to be very clearly related to what David Savage was suggesting we had done and wanted to do." 8. At the time he was concerned that this was some kind of attempt by Mr Savage to set him up or compromise him. However, as set out below, the primary judge was not persuaded, at J[310], that he had any real concerns about Mr Savage compromising him in any way, and there is no appeal against that finding. 9. Mr Stewart understood Mr Savage genuinely to want to pursue the proposal described in the file note and that "the whole conversation was, in order to secure it, he would have to make this payment" (he later said that he believed what Mr Savage was telling him which was that he genuinely intended to enter into the arrangement described) and that it was possible that Mr Savage had been prepared to enter into the same arrangement in the past, although in Mr Stewart's opinion this was not true. 10. Immediately after the in-person meeting Mr Stewart had spoken to Mr Wild who reported that Mr Stewart had said to him: "Savage has come to me to talk about a tender in Iraq and he wants to put a fee on the job, a bribe", to which Mr Wild said he responded, "Tell him to fuck off. He is just setting you up": as found by the primary judge at J[301]. 11. After the conversation with Mr Savage, Mr Stewart also spoke to Stephen Sasse, Leighton's General Manager of Organisation Strategy, who was about to commence an investigation into another matter associated with a separate Leighton project known as "Eclipse". Mr Stewart told Mr Sasse what Mr Savage had said to him and asked Mr Sasse to bear that conversation in mind when he was conducting his investigation and to see if anything similar was occurring in Asia. His evidence was that he told both Mr Sasse and Mr Gregg that he did not believe that the allegations that Mr Savage made were true. 1. Mr Wild's evidence was that Mr Stewart came to him in November 2010 and said words to the effect that Mr Savage had come to him to talk about a tender in Iraq and he wanted to put a fee on the job, a bribe. Mr Stewart also told him that he was going to call Mr Savage and tell him something to the effect that he would not agree to pay a bribe. He thought Mr Stewart was dealing with it and that is why he did not take any further action. He said that he did not consider the allegations of past bribery to be true. He believed that bribing public officials "would not be beyond Mr Savage" but did not accept that that was likely to have occurred because he expected and believed that various other checks and balances in the system would stop Mr Savage from bribing public officials. He knew in November 2010 that Mr Savage had a habit of flouting procedures and safeguards that were in place within Leighton. 2. Neither Mr Savage nor Mr Sasse was called as a witness. The 2011 Proposal 1. In the proposal form dated 27 May 2011 for the 2011 Primary Policy ("2011 Proposal"), signed by David Mortimer, then Chair of the Leighton Board, and Ashley Moir, Group Company Secretary, Leighton did not disclose the existence of the Iraq File Note, or any of its contents. This was so notwithstanding that question 24 in the 2011 Proposal asked: "Is the Company aware of any facts which might give rise to a claim being made against any Directors or Officers in their capacity as Directors or Officers of the Company or its subsidiaries?" 1. The 2011 Proposal included, under the heading "Your Duty of Disclosure": "Section 21 of the Insurance Contracts Act 1984 provides that before you enter into a contract of general insurance with an insurer, you have a duty to disclose to the insurer every matter that you know, or could reasonably be expected to know, is relevant to the insurer's decision whether to accept the risk of the insurance and, if so, upon what terms. You have the same duty to disclose those matters to the insurer before you renew, extend, vary or reinstate a contract of general insurance." 1. The layers of insurance cover are set out at [8] above. The primary layer was insured as to 50% by each of AIG and Chubb. The 2011 Excess Policies, held with Catlin and Liberty, followed the model Marsh Excess Wording, cl 1.1 of which provided: "We agree to insure the Insured on the same terms as the Primary Policy except as specifically set out in this Excess Layer Policy and any attached endorsements." 1. Clause 2.1 of the Marsh Excess Wording provided: "The Insured must supply the same documents and information to Us as the Insured supplies to an Underlying Insurer in relation to any Underlying Insurance." 1. The evidence of Timothy Powell for Catlin and Christopher MacLean of Liberty was that the 2011 Proposal was sent by Leighton's broker Marsh Pty Limited ("Marsh") to Catlin (on 3 June 2011) and Liberty (on 16 June 2011) for the purposes of preparing the 2011 Excess Policies. They were also provided with the proposed quotation and policy wording for the 2011 Primary Policy. Discovery of the Iraq File Note 1. The Iraq File Note was discovered by Leighton's external solicitors in early-November 2011 during a document review in response to a s 33 notice issued under the Australian Securities and Investments Commission Act 2001 (Cth) which was unrelated to the current proceedings. In response to that notice, Mr Stewart supplied documents including the notebook which contained the Iraq File Note he had created on 23 November 2010. 2. The external solicitors informed Leighton's Group Legal Counsel, Craig van der Laan, of the Iraq File Note in early-November 2011. Mr van der Laan then informed Stephen Johns (then Chairman of the Leighton Board), Hamish Tyrwhitt (then CEO of Leighton) and Wayne Osborn (then Chairman of the Ethics and Compliance Committee) via various meetings around this time. An external solicitor was engaged for legal advice. 3. Shortly thereafter, the Leighton Board unanimously decided to conduct an internal investigation to determine the veracity of the claims in the Iraq File Note. The outcome of the internal investigation was not in evidence before the primary judge. 4. Within days the Leighton Board decided to refer the Iraq File Note to the AFP. On 7 November 2011, Leighton's solicitors wrote to the AFP and provided a copy of the Iraq File Note, a document setting out Leighton's understanding regarding the individuals identified by initials or abbreviations in the Iraq File Note, their roles and whether they were still employed by Leighton, two ASX media releases regarding the award of the Iraq Phase 1 and Phase 3 Projects issued on 25 October 2010 and 14 October 2011 respectively, and a draft ASX media release to be issued "in the event that aspects of any investigation by the AFP become public" (collectively the "AFP Referral"). The covering letter identifies that there is some uncertainty as to whether the "US$500 million extension/variation to the current contract" referred to in the Iraq File Note is related to either of the Iraq Phase 1 or Phase 3 Projects or is a completely separate contract. 5. On 9 November 2011 the AFP responded indicating that "[t]he information contained in the referral indicates foreign bribery offences may have been committed by Leighton Offshore employees" and commenced an investigation. During the investigation, Leighton collected and reported information to the AFP. 6. On 13 February 2012 Leighton issued the 2012 ASX Media Release. This stated that Leighton Holdings: "…had reported to the [AFP] a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws. The possible breach related to payments that may have been made by Leighton's subsidiary company, Leighton Offshore Pte. Limited, in connection with work to expand offshore loading facilities for Iraq's crude oil exports. Leighton Holdings' Chairman, Mr Stephen Johns, said that Leighton had volunteered the information to the AFP after becoming aware of a possible breach. "We are cooperating fully with the AFP as they conduct an investigation into these matters," said Mr Johns. … At this stage it is not known whether there has been any wrongful or illegal conduct, or whether there will be any adverse financial consequences for Leighton. The AFP investigation is at an early stage…". 1. Subsequently, the AFP obtained a search warrant dated 12 December 2012, authorising the AFP to enter and search the premises of Leighton's external solicitors. The search warrant was not in evidence on appeal. However, the suspected offence identified in the search warrant was extracted by the primary judge at J[73] as follows: "That between 2009 and 2011, in Iraq and Australia, David Stewart, David Savage, Russell Waugh, Peter Cox, Wallace King, William Wild and divers [sic] other employees of Leighton Offshore Private Limited, Leighton International Limited and Leighton Holdings Limited, caused a benefit to be paid to a foreign public official contrary to Section 70.2(1)(ii) of the Criminal Code Act 1995 (Cth)." (Emphasis in original). 1. On 7 January 2017, Mr Gregg was charged with offences under s 1307(1) of the Corporations Act relating to alleged falsification of company books and records. That conduct was not related to the matters identified in the Iraq File Note. He was convicted of the offences and sentenced but the verdict was later quashed, and an acquittal entered: Gregg v R [2020] NSWCCA 245. 2. The AFP charged Mr Waugh with alleged foreign bribery and Mr Savage with allegedly misleading the Leighton Board in an October 2010 presentation about the Iraq Phase 1 Project. As at the date of the appeal hearing, those trials had not commenced. Notification to the 2011 Insurers 1. On 22 February 2012 Leighton sent two letters to Jim Holland, Claims Manager at Marsh. The first letter was in the following terms: "Notification of a Loss under Crime Manager Complete Insurance Policy Number 109086 (the Policy) On behalf of Leighton Holdings Limited (the Company), I am writing to provide formal notification of a possible Loss under the Policy. I enclose a copy of an ASX announcement released by the Company on 13 February 2012. In the release, the Company said it had reported to the Australian Federal Police (AFP) a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws. The possible breach related to payments that may have been made by one of the Company's overseas subsidiaries, Leighton Offshore Pte Ltd, in connection with work to expand the offshore loading facilities for Iraq's crude oil exports. The AFP investigation has commenced and is at an early stage. The Company is co-operating fully with the AFP's investigation. At this stage, it is unclear whether the acts of any Employee or Third Party has caused a Loss to the Company or its subsidiaries as a result of conduct which is the subject of the AFP Investigation." (Emphasis in original.) 1. The second letter was in the following terms: "Notification of a circumstance/claim under Directors and Officers' Liability and Company Securities Insurance Policy Number 113690 (the Policy) On behalf of Leighton Holdings Limited (the Company), I am writing to provide formal notification under the Policy of a circumstance that may result in, or which may already constitute, a Claim as defined in the Policy. I enclose a copy of an ASX announcement released by the Company on 13 February 2012. In the release, the Company said it had reported to the Australian Federal Police (AFP) a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws. The possible breach related to payments that may have been made by one of the Company's overseas subsidiaries, Leighton Offshore Pte Ltd, in connection with work to expand offshore loading facilities for Iraq's crude oil exports. The AFP investigation has commenced and is at an early stage. The Company is co-operating fully with the AFP's investigation. As at the date of this letter, the AFP has conducted 5 voluntary interviews. None of the interviewees sought the assistance of a legal adviser. It has also indicated that it will wish to undertake a significant number of interviews of current and former employees of Leighton Offshore Pte Ltd and other relevant persons from the Company. To date, the Company's internal investigation has focussed on the collection of electronic data. At the request of the AFP, only one interview has been undertaken by the Company at this stage. As a result, the Company does not presently have a view as to when a report from the investigation is likely to be available. …". (Emphasis in original.) 1. On 8 October 2013 Leighton notified the 2011 Insurers of the MCI Class Action proceedings. 2. In May and June 2014 Leighton notified the 2011 Insurers of multiple notices issued by ASIC regarding the Iraq Phase 1 Project. 3. On 10 November 2016 Leighton notified the 2011 Insurers of the Inabu Class Action proceedings. Consideration and determination of the issues 1. For the reasons set out above, we will defer addressing Issues 1 to 5, which relate to matters of construction of the policies of insurance (see below at [340]ff). Issue 6: Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers? 1. This issue arises from grounds 1, 3, 4, 5 and 7 of CIMIC's notice of cross-appeal in the Berkley Appeal. Specifically, CIMIC contends that: 1. The primary judge erred at J[322] and [326] in finding that Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act by failing to disclose to the 2011 Insurers that: 1. there was an agreement to pay a nominated subcontractor at above market price so that Leighton Offshore could win work in Iraq; and 2. there was a further opportunity to pay a nominated subcontractor at above market price so that Leighton Offshore could win work in Iraq, (together referred to by CIMIC as the "Savage Statements") in circumstances where her Honour did not connect those facts to any past or proposed unlawful conduct and did not at J[264] or [266] make any finding as to the state of mind of Mr Savage. 1. The primary judge erred at J[300] in finding that Mr Stewart's interpretation of the Savage Statements as referring to bribes (or unlawful conduct) was reasonable as that finding was not open or supported on the evidence, with particular reference to the following matters: 1. the Savage Statements did not identify how the past or proposed payment did result in or would result in bribery or other unlawful conduct occurring or necessary elements of bribery or unlawful conduct; 2. the primary judge made no finding that Mr Stewart's interpretation was based on any matter other than the words of the Savage Statements; and 3. the primary judge's finding was limited to a finding at J[300] that the words "could suggest bribery", which is a speculation as to whether other facts existed to provide a foundation for that conclusion, when Mr Stewart was not found to have known of such foundational facts. 1. The primary judge erred in relying upon Mr Stewart's interpretation of what Mr Savage had told him as a matter required to be disclosed under s 21(1)(b) of the Insurance Contracts Act when that was based upon inference and the interpretation was not a matter which a reasonable person in Leighton's circumstances could be expected to know was a matter relevant to an insurer. 2. If the primary judge's reasons are to be interpreted as finding that Leighton breached its duty of disclosure in s 21(1)(b) of the Insurance Contracts Act by failing to disclose to the 2011 Insurers the Savage Statements and Mr Stewart's interpretation (without further factual bases), the primary judge erred. 3. The primary judge erred in finding, at J[328], that Leighton made a misrepresentation which constituted a relevant failure under s 27AA of the Insurance Contracts Act. 1. It is convenient to deal first with CIMIC's contention that the primary judge erred at J[300] in concluding that: "I consider that Mr Stewart interpreted what Mr Savage had told him in a reasonable way, and that saying that payments to a subcontractor were above market price and would help Leighton "win" the contract, could suggest bribery." 1. There is no error in that conclusion. Plainly the matters referred to in this paragraph objectively could suggest bribery. It is the combination of significant overpayments to a subcontractor and the fact that such payments would help Leighton to "win" the contract with SOC that leads to that conclusion. That supports the reasonableness of Mr Stewart's interpretation of what he was told by Mr Savage. In this regard it should be recalled that the overpayments were identified in the Iraq File Note as being such that the real value of the work was about 50% of what was paid (for the Iraq Phase 1 Contract) or proposed to be paid (for the extension/variation of that contract in respect of the Iraq Phase 3 Project) and that it was identified in the Iraq File Note that the Iraq Phase 1 Contract with SOC had been "won by" that overpayment to the subcontractor. Section 21 of the Insurance Contracts Act 1. Section 21 of the Insurance Contracts Act as at 30 June 2011 is quoted at [24] above. 2. The Explanatory Memorandum to the Insurance Contracts Bill 1984 (Cth) explains that, in part, the rationale for cl 21 (which became s 21) was to clarify the test of materiality, and to ameliorate the existing law by providing that the insured's duty is only to disclose those facts which they knew or a reasonable person "in the circumstances" would have known to be relevant to the insurer's assessment of the risk and further, that the Court would not be precluded from considering an insured's position and circumstances in applying the test. Applicable principles 1. The relevant point in time for the purposes of determining both what is known to the insured, and materiality, under s 21 is the time when the contract is made: s 11(9)(b). In Permanent Trustee Australia Limited v FAI General Insurance Company Limited (in liq) (2003) 214 CLR 514; [2003] HCA 25 at [30] (McHugh, Kirby and Callinan JJ) it was held that "[t]he word "knows" [in s 21] is a strong word. It means considerably more than "believes" or "suspects" or even "strongly suspects"." The terms "known" and "knows" are used in s 21 in their ordinary sense and what is or is not known is a question of fact: Commercial Union Assurance Co of Australia Ltd v Beard (1999) 47 NSWLR 735; [1999] NSWCA 422 at [37]. As held by Meagher JA (with whom Macfarlan and Emmett JJA agreed) in Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 at [98] ("Prepaid v Atradius"), the relevance of what is known must: "… either be to the decision of the insurer as to whether to "accept the risk" or as to the terms on which it will do so. … In this context "matter" describes anything which is known to the insured which also is known to be relevant, or that could be expected to be known to be relevant, in each case in the respects described above." 1. In CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30 at [52] ("CGU v Porthouse"), the Court said that the phrase "a reasonable person in the circumstances could be expected to know" in s 21(1)(b) of the Insurance Contracts Act: "… has been interpreted as meaning that one should take into account only factors which are "extrinsic" to the insured, such as the circumstances in which the policy was entered into, rather than "intrinsic" factors such as the individual idiosyncrasies of the insured. Whilst it is possible to take into account the circumstances of the insured, the ultimate question under s 21(1)(b) turns on consideration of a reasonable person's state of mind, not the insured's state of mind." (Footnotes omitted.) 1. In GIO General Limited v Wallace [2001] NSWCA 299 (cited with approval in CGU v Porthouse at footnote 37) Heydon JA held: "Under s 21(1)(b) it is necessary, in judging what a reasonable person could be expected to know, to take into account the circumstances affecting the actual insured, but the ultimate question turns on what could be expected of a reasonable person's state of mind, not on the insured's state of mind." 1. Having referred to these authorities, Meagher JA (Ward JA and Sackville AJA agreeing) in Stealth Enterprises Pty Ltd t/as The Gentlemen's Club v Calliden Insurance Limited [2017] NSWCA 71 ("Stealth Enterprises v Calliden") held at [41]: "… the imputing of knowledge of the insured's "circumstances" to the hypothetical reasonable person is directed to putting them in the same position as the insured without taking into account the insured's subjective state of mind (for example, that the insured thought information was irrelevant to an insurer). The Court does however take into account that the insured knows the facts relied on as not having been disclosed…". (Emphasis in original.) 1. The issue under s 21(1)(b) of the Insurance Contracts Act is whether the particular matter that was known to the insured would be something that a reasonable person in the circumstances of the insured would know to be relevant to the insurer's decision whether to accept the risk under the particular policy and if so, on what terms. It is not enough if the reasonable person merely suspects or considers that the matter could be so relevant. The primary judge's key findings as to breach of s 21 and the parties' challenges to these findings Arrangements between Leighton Offshore and Unaoil 1. The primary judge found, and it is not challenged on appeal, that the reference in the Iraq File Note to "N.S.C" was a reference to Unaoil, the subcontractor who was appointed by Leighton Offshore to do the onshore and offshore security work for the Iraq Phase 1 and Phase 3 Projects: at J[192]. The primary judge found, further, that there was no "direct evidence" that Leighton Offshore or Unaoil ever paid money to anyone in either SOC or the Iraqi Ministry of Oil in order to "win" the Iraq Phase 1 and Phase 3 Contracts: at J[195]. The primary judge found at J[237] that there was insufficient evidence to conclude that the MOUs and MOAs between Leighton and Unaoil involved corrupt payments so Leighton could "win" the Iraq Phase 1 and Phase 3 Projects "where they were vetted by Leighton's lawyers and provided Leighton Offshore with specific commercially justifiable advantages", being: 1. Leighton employees would not be put at risk by having to work onshore in Iraq; 2. Unaoil agreed to exclusively assist Leighton not Saipem; 3. Unaoil provided connections for Leighton as it entered a new geographic market; and 4. the liquidated damages provision only operated if Leighton won the bid, so if its purpose was to ensure Unaoil received "bribe money" then this purpose would not be achieved if Leighton did not win the tender, notwithstanding that the MOU provided for Unaoil to provide services even if it did not win the subcontract. 1. AIG, Chubb and Catlin challenge this finding and contend that the primary judge erred in concluding that there was insufficient evidence of corrupt payments to win the Iraq Phase 1 and Phase 3 Projects. They also challenge the primary judge's conclusion at J[250] and contend that the primary judge should have found that Leighton agreed to pay Unaoil additional money to be used improperly so Leighton could win the Iraq Phase 1 and Phase 3 Projects. They also contend that the primary judge erred in concluding that the arrangements between Leighton and Unaoil provided Leighton with "commercially justifiable advantages". They say that the primary judge erred in finding that: (a) there is no direct evidence that Unaoil ever paid money to anyone in SOC; (b) there is no evidence that Mr Oday of SOC agreed a retainer with Unaoil; and (c) there is no evidence that anyone at Leighton Offshore was made aware of any such retainer. These challenges are considered at Issue 8 below starting at [251]. CIMIC supports the primary judge's findings. 2. The primary judge then found at J[250]-[252]: "[250] On balance, I am not persuaded to a requisite standard on the material that any person at Leighton Offshore agreed to pay Unaoil additional money to be used improperly so Leighton could win the Iraq work. The evidence of the relationship between Leighton and Unaoil is limited to emails that leave much unexplained. The agreements may raise questions, but those questions cannot be definitively answered. There is minimal evidence of dealings between Unaoil and the Ministry [of] Oil or SOC, or between Mr Oday and the Ministries [of] Oil or Finance. There is certainly no evidence that demonstrates that bribes were actually paid to decision makers or that bribes caused Leighton to win the work. [251] Leighton's tender price was always about US$200 million less than Saipem's, which provided an objective and legitimate reason for Foster Wheeler, SOC and the Ministry of Oil to prefer Leighton's bid. [252] An available interpretation of the material before the Court is that Unaoil had connections with Mr Oday, and possibly other persons involved in the project. Unaoil's involvement with Leighton as its subcontractor, and Unaoil's ability to obtain information, could assist Leighton win the tender ahead of Saipem. This is consistent with Chubb's submission that Unaoil provided "information and guidance concerning the principal's consideration of tenders"." The Iraq File Note 1. As to the Iraq File Note, the primary judge found that there was no basis to conclude that the Iraq File Note was not an accurate record or to question whether Mr Stewart accurately recorded his understanding of what Mr Savage was saying: at J[290]. The primary judge also accepted that the Iraq File Note is a business record within the meaning of s 69 of the Evidence Act, but added that this did not mean that the Court must accept the representations are true: at J[190]. 2. AIG, Chubb and Catlin contend that the primary judge should have found that, in the absence of evidence to the contrary, the Iraq File Note is sufficient proof that the facts and the representations recorded therein are true. Again, these challenges are considered at Issue 8 commencing below at [251]. CIMIC contends that there were reasons to doubt that the Iraq File Note was an accurate record of what Mr Savage told Mr Stewart, in particular, because Mr Stewart considered that Mr Savage may be trying to set him up. Leighton's knowledge for the purposes of s 21 1. The primary judge found that the relevant knowledge of Leighton, for the purpose of determining whether it had an obligation of disclosure under s 21 of the Insurance Contracts Act prior to the inception of the 2011 Primary Policy, was "at least" that of Mr Stewart, but that the knowledge of Mr Savage and Mr Wild prior to that date "can also be imputed to Leighton": at J[187]. CIMIC contends that the primary judge erred in so finding, and that the knowledge of Leighton for this purpose should have been that of Mr Savage, as only he had direct knowledge of the underlying facts. Mr Stewart and Mr Wild 1. The primary judge found that Mr Stewart understood the "allegations recorded in the Iraq File Note" as involving "illegitimate, illegal and improper payments": at J[253], that he was concerned about what Mr Savage told him: at J[290], and that he considered that, if Mr Savage implemented the concept he was proposing, then "it would expose Leighton and its directors to serious legal trouble and possible claims": at J[295]. At J[300], set out again for convenience, the primary judge concluded: "I consider that Mr Stewart interpreted what Mr Savage had told him in a reasonable way, and that saying that payments to a subcontractor were above market price and would help Leighton "win" the contract, could suggest bribery." 1. At J[318], the primary judge made the following key, unchallenged, findings (which formed part of the 2010 Declaration made against the 2010 Insurers) as to the knowledge of each of Mr Stewart and Mr Wild: "(1) Mr Stewart and Mr Wild understood what Mr Savage was saying in the 23 November 2010 meeting as amounting to Leighton making improper payments in connection with the Iraq Contracts. Mr Stewart understood the payments were bribes even though Mr Savage did not say as much. They did not know whether what Mr Savage was saying was true or not. (2) Mr Stewart told Mr Savage he did not give his permission to progress a negotiation involving what he considered "illegal" payments to subcontractors. He may have assumed that Mr Savage would obey that instruction, however, he did not take any steps to investigate the Iraq contracts, even though he had the ability to do so. However, both Mr Wild and Mr Stewart took the positive step of asking others about potential misconduct in Iraq, which is consistent with them having concerns that what Mr Savage said was possibly true. (3) Mr Stewart and Mr Wild did not believe that Mr King had approved overpayments to win the Phase 1 Contract. Even so, the fact that Mr Savage was a COO of LIL and was, to Mr Stewart and Mr Wild's knowledge, instrumental in projects that were causing Leighton serious ethical issues into 2011, meant that Mr Savage's statements proposing these payments was something significant for the business and, as Mr Stewart accepted, if true, could have negative consequences for Leighton." 1. The primary judge, at J[322], stated that for the 2011 Insurers to succeed in their defence relying upon s 21 of the Insurance Contracts Act, the following findings were required: "(1) Mr Stewart had been told about the matters identified in the Iraq File Note, and he was not sure whether they were true or not, which I have already found above [at J[318]]; and (2) A reasonable person in the position of CIMIC would have known the possibility of the truth of those matters was relevant to the Insurers' decision whether to grant cover and the terms of such cover, a finding I am prepared to make as outlined below [at J[326]]." 1. CIMIC challenges the primary judge's conclusion in this regard. 2. Her Honour was satisfied, as set out in the chapeau to J[326], that: "… a hypothetical reasonable person in the position of Leighton would have considered that the allegation by the relevant COO of an agreement to pay (and the further opportunity to agree to pay) a nominated subcontractor at above market price, so that Leighton Offshore could "win" the contract for the Iraq work, was a matter that ought to have been disclosed to the Insurers pre-inception of the 2011 cover, as those facts, if true, could clearly give rise to losses that would be covered by the 2011 Policy." 1. The matters the primary judge relied upon in reaching that conclusion, also set out at J[326], were that: "(1) It is objectively reasonable that the matters recorded in the File Note, if true, were very serious and could lead to Losses as defined in the 2011 Policy. (2) The statements were made by the COO responsible for the contracts in question and were far removed from a mere rumour by a third party, without first-hand knowledge. There could be no guarantee that such conduct, if true, would avoid detection and public disclosure. (3) Very soon after the Iraq File Note was disclosed to Leighton's lawyers in late 2011, the information was provided to the Australian Federal Police. In February 2012, an ASX announcement about the issue was made, and then the 2012 Notification was made. In an April 2012 internal Leighton presentation, it was noted that there had been four Board initiated reviews, including reviews of Leighton's Risk Management Practices and Tender Practices. When those steps were taken, Leighton did not know whether the allegations in the Iraq File Note were true or not. Nevertheless, those steps were taken on legal advice that it was appropriate to do so. To my mind, that demonstrates conduct of a reasonable hypothetical insured with the knowledge of the allegations recorded in the Iraq File Note. (4) Mr Stewart actually considered the seriousness of what was being communicated because he compared what he was told with the AWB, and he knew that, if Mr Savage was telling the truth, it could lead to claims against the company." 1. CIMIC challenges these findings. 2. The primary judge then held that, because Leighton made no reference to the "Iraq File Note facts" in the 2011 Proposal, Leighton made a misrepresentation to AIG: at J[328]. Mr Savage 1. The primary judge declined to draw an inference of the kind in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 against CIMIC on account of Mr Savage not being called to give evidence: at J[259]. In this regard the primary judge relied, in part, upon what Mr Savage had said in the transcript of his ASIC compulsory examination: at J[262]. AIG contends that the primary judge erred in having regard to that evidence for this purpose as the transcript was only admitted for a limited purpose. As set out at [267] below, we agree that the primary judge erred. 2. Her Honour did not make any positive findings as to what was known by Mr Savage, but found that: 1. on 23 November 2010, Mr Savage was aware from Mr Waugh that he was negotiating with the Ministry of Oil for an extension of the Iraq Phase 1 Contract (rather than requiring a separate bid for the Iraq Phase 3 Project) at a value of about US$500 million, which was consistent with the Iraq File Note. Shortly thereafter, on 10 December 2010, Leighton signed an MOA in relation to the Iraq Phase 3 Project with Unaoil with a price (at that stage) of US$75 million and liquidated damages of US$40 million, which was also consistent with the figures in the Iraq File Note: at J[263]; 2. those facts did not necessarily mean that Mr Savage understood that improper payments had been, or would be, paid by Leighton. Those facts could be construed as indicating only that Mr Savage understood the close connections that Unaoil had with Mr Oday and persons working in the Ministry and that those could assist Leighton's prospects of securing the Iraq Phase 1 and Phase 3 Contracts ahead of its only competitor, Saipem: at J[264]; 3. there was nothing to demonstrate that Mr Savage accepted that the payments he described were as Mr Stewart believed: at J[266]; and 4. her Honour was not persuaded on the material before the Court that Mr Savage was actively seeking to hide payments by Unaoil by changing descriptions in various green sheets and presentations: at J[266]. 1. AIG, Chubb and Catlin challenge these findings. They contend that the primary judge ought to have found that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful. These challenges are considered at Issue 8. Consideration 1. The overarching contention of CIMIC on Issue 6 is that the primary judge erred both in her Honour's findings as to what CIMIC knew, and as to materiality, for the purposes of s 21 of the Insurance Contracts Act. CIMIC advances, in essence, seven submissions. 2. First, CIMIC submits that it is not clear what "matter" the primary judge held ought to have been disclosed under s 21 of the Insurance Contracts Act. CIMIC submits that the "matter" found by the primary judge to be known by CIMIC for the purposes of s 21 is either what it describes as the Savage Statements (set out above at [114]) or both the Savage Statements and Mr Stewart's interpretation of them as being possibly true. CIMIC submits that in either case, the primary judge erred in finding that s 21 applied based upon the findings at J[322]. 3. CIMIC's submission should be rejected. It is clear from J[322], extracted above at [132], that the primary judge found that the matter that CIMIC ought to have disclosed under s 21 comprised the "matters identified in the Iraq File Note". These are sometimes described by the primary judge as "allegations", presumably having regard to the fact that they disclose at least potential serious illegality or impropriety albeit that, as CIMIC submits, there is nothing to suggest that Mr Savage was making something in the nature of an allegation of wrongdoing when he communicated the matters identified in the Iraq File Note to Mr Stewart on 23 November 2010. In the chapeau to J[326], the primary judge paraphrased and summarised some of the matters identified in the Iraq File Note, but that distillation should not be taken as a narrowing of the matter that her Honour found ought to have been disclosed by Leighton under s 21. 4. Thus, the matter that the primary judge found ought to have been disclosed under s 21 went beyond the Savage Statements, as defined by CIMIC, but did not include Mr Stewart's interpretation of those statements. That was not a matter "identified in" the Iraq File Note and there is nothing to suggest that the primary judge found that Mr Stewart's state of mind ought to have been disclosed to the 2011 Insurers under s 21. CIMIC's contention as to this should thus be rejected. It is, of course, correct that at J[322] the primary judge also made reference to the fact that Mr Stewart was not sure whether the matters identified in the Iraq File Note were true or not. The possibility that the matters identified in the Iraq File Note may have been true was an important part of the factual context, for reasons elaborated upon at [269]-[283] below. 5. Nor, contrary to AIG and Catlin's submission, did the primary judge find that "the whole contents of the Iraq File Note" was the "matter" which had to be disclosed by Leighton under s 21. Her Honour rightly excluded those parts of the Iraq File Note that went beyond "matters identified" in that note. Thus, her Honour did not find that Leighton ought, under s 21, to have disclosed Mr Stewart or Mr Wild's reaction to or interpretation of Mr Savage's statements as recorded in the Iraq File Note. 6. The matters identified in the Iraq File Note were that, according to Mr Savage: 1. Leighton had won the US$720 million Iraq Phase 1 Contract by making a payment of US$87 million to a nominated subcontractor, who would do the onshore works, when the real value of the work was less than half of that; 2. Leighton had an opportunity to negotiate a US$500 million extension/variation to the Iraq Phase 1 Contract but that would require a payment of US$50 to 60 million to a third party nominated subcontractor who would do all onshore works, when the real value of the work was less than half of that; 3. Mr Waugh had negotiated the subcontract; and 4. Leighton had been introduced to the nominated subcontractor by the client, SOC. 1. In this regard it is of no moment that Mr Stewart's evidence was that he recorded what Mr Savage told him in substance but not entirely verbatim. As set out above, the primary judge found at J[290] that the Iraq File Note was an accurate record of what Mr Stewart genuinely believed Mr Savage had said, and it was made during and shortly after the conversations. 2. The "matters identified in the Iraq File Note", which the primary judge found ought to have been disclosed to the 2011 Insurers under s 21, thus comprised both the substance of each of subpars (1) to (4) at [146] above, and the fact that they were communicated by Mr Savage, a very senior officer in Leighton and the COO with direct executive responsibility for such matters, in one face to face and one telephone meeting with Mr Stewart, another COO and CEO-designate. All of those components are important when analysing whether CIMIC ought to have disclosed "the matters identified in the Iraq File Note" under s 21. 3. Importantly, the "matters identified in the Iraq File Note did not include Mr Stewart's understanding of the term nominated subcontractor or NSC", set out above at [91(5)]. As CIMIC submitted, there is no evidence to support this expression having a standardised industry meaning. For the purposes of s 21, the significance of the description of the payment being made to a nominated subcontractor, which formed part of the matters identified in the Iraq File Note, is that a subcontractor had been paid US$87 million in circumstances where that was around twice the real value of their work and that the contract with SOC had been won by that payment. Contrary to CIMIC's submission, it does not matter that Mr Stewart's understanding of the term "nominated subcontractor" may not have accurately reflected Unaoil's status. Nor does it matter how Mr Savage understood the term "nominated subcontractor". 4. Once the matter that the primary judge found ought to have been disclosed under s 21 of the Insurance Contracts Act is properly characterised, contrary to CIMIC's submission, there is no error in the primary judge having found, at J[322], that the 2011 Insurers should succeed in their defence relying upon s 21. The evidence supports a conclusion that the matters identified in the Iraq File Note were both known to Leighton, and that a reasonable person in Leighton's circumstances would have known (not merely strongly suspected or believed) that those matters would be relevant to whether an insurer under a proposed D&O policy would accept the risk and if so on what terms. 5. The following considerations support that finding: 1. The matters identified in the Iraq File Note, including that Mr Savage had conveyed the information to Mr Stewart, were clearly matters known to at least Mr Stewart from 23 November 2010. 2. There was no reason to dismiss what Mr Savage was saying to Mr Stewart as loose or idle rumour, which Mance LJ (Buxton and Ward LLJ agreeing) held in Brotherton v Aseguradora Colseguros SA (No 2) [2003] EWCA Civ 705; [2003] 2 All ER (Comm) 298 ("Brotherton") at [28] would be immaterial. As the primary judge found at J[291], the logical reason why Mr Savage went to see Mr Stewart about the Iraq Phase 1 Contract extension/variation and the Iraq Phase 3 Project was "because it was understood in Leighton by November 2010 that Mr Stewart was the person acting in the role of CEO, even though he had not formally succeeded Mr King. Further, the [Leighton Group Work] Procurement Guidelines required Mr Savage to seek authority from the CEO for any tender for more than A$500 million, and the Phase 1 Extension/Phase 3 Contract was for a sum of over US$500 million." The information was thus conveyed in meetings conducted between two senior executives of Leighton, one being the CEO-designate, discussing highly valuable contracts that Leighton had entered into and was proposing to vary or extend. Mr Stewart's evidence in cross-examination was that he understood that the proposal being put forward by Mr Savage was something that Mr Savage genuinely wanted to pursue and "the whole conversation was, in order to secure it [an extension or variation of the Iraq Phase 1 Contract], he would have to make this payment." That is consistent with this being an important and significant discussion about Leighton's business, far removed from an occasion for idle gossip or rumourmongering. 3. There is no suggestion in the evidence that Mr Stewart discovered anything that cast a different light upon those matters in the period between 23 November 2010 (when he met with Mr Savage) and 30 June 2011 (the inception date for the 2011 Policies). 4. If true, the matters identified in the Iraq File Note potentially involved (in that they could suggest) serious illegality or impropriety by Leighton that could lead to claims against the 2011 Insurers. That prospect was by no means fanciful. 5. As the primary judge found, at J[326(2)], there could be no guarantee that the matters identified in the Iraq File Note would, if true, avoid detection and public disclosure. We would add that the mere fact of the information having been communicated from a senior Leighton executive with responsibility for the Iraq Phase 1 Contract and subcontracting thereunder could well become public through voluntary disclosure, as in fact did happen in the 2012 ASX Media Release. That was a further reason, not relied upon by the primary judge, from which the obligation of disclosure under s 21 arose. 1. The primary judge's finding as to the materiality of the matters identified in the Iraq File Note is also plainly correct. The pertinent enquiry in this regard, under, relevantly, s 21(1)(b), is whether a reasonable person in the position of Leighton could be expected to know the matter (known to Leighton) to be a matter relevant to the decision of the insurer whether to accept the risk, and if so on what terms. Matters of relevance for the purposes of this enquiry include: 1. The nature of the insurance cover sought, being D&O Insurance. Having regard to this matter, a reasonable person would have appreciated that the matters identified in the Iraq File Note could be expected to lead to claims against the 2011 Insurers under the 2011 Policies. A reasonable person would have appreciated that, if true (and potentially even if not true), the matters identified in the Iraq File Note could lead to an "Investigation", defined in the 2011 Primary Policy to include "any formal written notification to an Official Body of a suspected material breach of an Insured Person's legal or regulatory duty", or to a "Claim" under the 2011 Primary Policy, defined to include a written demand, or a civil or regulatory proceeding seeking compensation or any other legal remedy or a criminal proceeding. In either case, there would be a prospect of claims of significance being made by Leighton under the 2011 Policies. 2. The fact that Leighton was a large Australian public company with disclosure obligations to both regulators and to the market and, given that status, we would infer that it also had a real interest in avoiding any allegation of being less than frank with the market. A reasonable person aware of those circumstances would be aware that the matters identified in the Iraq File Note could require or prompt disclosure to regulators or to the police and to the market, and that that could, in turn, lead to claims against one or more of the 2011 Insurers. 3. The 2011 Proposal included a direction that enquiries should be made of all appropriate staff, including before answering question 24, set out at [94] above. That would make it clear to a reasonable person in Leighton's position that such matters, namely matters known to senior officers of Leighton that might lead to claims against directors or officers of Leighton or its subsidiaries which would fall within the ambit of the 2011 Primary Policy, would be relevant to the 2011 Insurers' decision whether to accept the risk and if so, on what terms. 1. Each of these matters supports a conclusion that the matters identified in the Iraq File Note ought to have been disclosed to the 2011 Insurers under s 21. Our conclusion would be the same if the relevant matter known to Leighton included the additional fact that Mr Stewart did not know whether the matters identified in the Iraq File Note were true or not. 2. Whilst our conclusion as to materiality does not depend on this, in our opinion the content of the Iraq File Note as a whole (to the extent it goes beyond the matters identified in the Iraq File Note) is also a relevant circumstance for the purposes of the enquiry under s 21(1)(b). The context of a matter known to the insured may influence the analysis of materiality. Confirming the significance of context when analysing materiality, in Prepaid v Atradius, Meagher JA held at [100] (Macfarlan and Emmett JJA agreeing): "Whether an opinion is relevant to the insurer's decision to accept the risk or as to the terms on which it will do so, will depend, among other things, upon the subject matter of the opinion, the identity of the person holding it, the facts or premises upon which it is based and whether those facts or premises are true or believed by the insurer to be true." 1. Having regard to the content of the Iraq File Note as a whole, the relevant circumstances known to Leighton included the fact that Mr Savage told Mr Stewart that Mr King had approved the payment but would now deny it or have "forgotten it" and told Mr Stewart not to talk to Mr King. That would further support a conclusion that the matters identified in the Iraq File Note were material for the purposes of s 21. As AIG submits, why would it be suggested that Mr King would deny approving the payment if it were an entirely proper payment. The text in the Iraq File Note that records Mr Savage saying "No" when Mr Stewart suggested that he would talk to Mr King suggests that the matters reported by Mr Savage to Mr Stewart should not be shared with Mr King, and leads to a similar inference. Also, the fact that Mr Savage is not recorded in the Iraq File Note as having sought to reassure Mr Stewart when Mr Stewart said that he was uncomfortable about the payment, nor when he told Mr Savage that he understood the concept and that it was exactly what got the AWB "into trouble", was material. We would infer that if such reassurance had been given by Mr Savage then that would have been included in the Iraq File Note given that Mr Stewart's evidence was that it recorded the effect of what was said during the conversations. In that context, a reasonable person in Leighton's position would be more concerned that the matters identified in the Iraq File Note may involve some serious illegality or impropriety by Leighton. Those matters go to whether a reasonable person in Leighton's position could be expected to know that the matters identified in the Iraq File Note were relevant to the risk to be undertaken by the 2011 Insurers. 2. Second, CIMIC contends that the relevant knowledge of Leighton for the purposes of s 21 should be that of Mr Savage alone, and not Mr Stewart or Mr Wild, as Mr Savage was the person within Leighton who had greater direct knowledge of the underlying facts. Senior counsel for CIMIC submitted that as the primary judge did not make findings as to Mr Savage's state of mind her Honour could not make any findings as to Leighton's state of mind. That contention should be rejected. On any view, the knowledge of Mr Stewart, a COO and CEO-designate of Leighton, should be attributed to Leighton (noting that, as stated by Lord Hoffmann in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 and recently cited with approval by this Court in Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 at [283] (Gleeson, Leeming and White JJA) ("Anderson v Canaccord"), the so-called "directing mind and will test" was never intended to be a universal rule). Mr Stewart was an agent of Leighton with authority to receive and communicate relevant information to Leighton: see in this regard All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782 at [160]-[162] (Allsop CJ). 3. Having regard to the nature of the claim and the context and purpose of s 21, the knowledge of Mr Stewart should count as the knowledge of Leighton: see eg Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751 at [1660], cited with approval in Anderson v Canaccord at [235]; see also Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 at [70] (Meagher JA, Ward P and Adamson JA agreeing). Contrary to CIMIC's submission, the fact that the primary judge did not make any finding as to Mr Savage's state of mind does not mean that the 2011 Insurers "failed to discharge their proof." Mr Savage was not called as a witness and the primary judge considered she could not reach a conclusion as to his state of mind. It is highly artificial to submit in these circumstances that, for the purposes of s 21, the primary judge was unable to rely upon the knowledge of Mr Stewart, and to the extent relevant also that of Mr Wild, as that of CIMIC. 4. Significantly, the primary judge did not find that Mr Savage had knowledge that countered or materially diminished the significance, for the purposes of s 21, of the knowledge of Mr Stewart, and if necessary Mr Wild. Whilst there are aspects of Mr Savage's knowledge that the primary judge relied upon, at J[237], in finding that there was "insufficient evidence to conclude that the Unaoil MOUs and agreements involved corrupt payments", none of those aspects diminished the significance of the matters identified in the Iraq File Note for the purpose of s 21, which matters may have been true and may have indicated serious illegality or impropriety by Leighton. In these circumstances, CIMIC's contention that the primary judge dealt with the matters identified in the Iraq File Note "completely divorced from any other understanding that CIMIC had" goes nowhere. The primary judge made no findings as to "any other understanding that CIMIC had" and there was no cross-appeal from CIMIC contending that her Honour ought to have done so. 5. Further, whilst CIMIC submitted that Mr Savage may have had different "thought processes" from Mr Stewart as regards what it meant to "win" a contract "by" making a payment, or a different understanding as to what was meant by the "real value" of the Iraq Phase 1 Contract, that does not tell against the matters identified in the Iraq File Note being material for the purposes of s 21. Mr Stewart knew those matters. The possibility, unsupported by any evidence, that Mr Savage may have been able to provide additional exculpatory information, or had a different understanding, does not alter that conclusion. In any event, CIMIC did not suggest any meaning of either what it meant to win a contract by a payment to a subcontractor, or of a payment being less than half of the "real value" of the work, that would diminish the materiality of the matters identified in the Iraq File Note to the 2011 Insurers' risk. 6. The primary judge found that Mr Stewart and Mr Wild did not know whether or not the statements were true. That was relevant for the purposes of s 21 to the extent that it meant that the matter which had to be disclosed under s 21 did not include any additional information such as that Mr Stewart knew that the matters identified in the Iraq File Note either were or were not true. Contrary to CIMIC's submission, this was not a case in which there was evidence before the primary judge that Mr Savage knew that the matters identified in the Iraq File Note, which he had communicated to Mr Stewart, were "perfectly innocent facts" or where Leighton knew that the contracting arrangements in Iraq were other than as indicated in the Iraq File Note. Thus, this was not a case, such as that referred to by Colman J in Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The 'Grecia Express') [2002] EWHC 203 (Comm); [2002] 2 All ER (Comm) 213 ("The Grecia Express") at [282(2)] and [284] and by Mance LJ in Brotherton at [22], where the circumstances "may to all outward appearances raise a suspicion that [the insured] has been involved in criminal activity or misconduct going to moral hazard but which [the insured] knows not to be the case". 7. Rather, on the evidence before the Court the matters identified in the Iraq File Note fall within the third category considered by Colman J in The Grecia Express at [282] and [285] (approved of as "clearly right" by Mance LJ, Buxton and Ward LLJ agreeing, in Brotherton at [24]) where circumstances known to the insured (here that Mr Stewart and Mr Wild did not know whether the matters identified in the Iraq File Note were or were not true) "reasonably suggest that the magnitude of the proposed risk may be greater than what it would have been without such circumstances." In such a case, where the known facts suggest that there may be additional facts which might exist which would increase the magnitude of the risk: "That which invests the circumstances with materiality is emphatically not the existence of the suggested facts, but the existence of the known facts, for the underwriter is entitled to take into account the risk that the suggested facts may be true and the proposer is not entitled to deprive the underwriter of that opportunity because he personally believes albeit he does not know for certain that the suggested facts are untrue." (Emphasis in original.) 1. In Brotherton at [24] Mance LJ also affirmed the correctness of Colman J's view in The Grecia Express at [285] that facts which, when viewed objectively, suggest facts might exist which would increase the magnitude of risk do not cease to be material even if it may ultimately be demonstrated that the suggested facts did not exist. As Phillips J held in Inversiones Manria S.A. v Sphere Drake Insurance Co. Plc. (The 'Dora') [1989] 1 Lloyd's Rep 69 at 93, when accepting a risk, underwriters are properly influenced by facts that "raise doubts about the risk" and not merely by facts which, with hindsight, can be shown to have actually affected the risk. 2. CIMIC submits that Mr Savage should be taken to have known that Unaoil was not in fact a nominated subcontractor as Mr Stewart understood the term, as it was not a subcontractor that SOC, the client, had appointed. CIMIC relies in this regard on the absence of any suggestion that this is so in the MOAs in evidence. We have already discussed this. The primary judge made no finding as to this. Whilst we similarly make no finding, any such finding would not relevantly alter the materiality of the matters identified in the Iraq File Note. Those matters clearly suggested the possibility of serious illegality or impropriety irrespective of that fact. Moreover, consistent with the authority we have set out above, even if with hindsight it were apparent that the nominated subcontractor identified in the Iraq File Note was not "nominated" by SOC, Mr Stewart was not aware of that prior to the inception date for the 2011 Policies. This does not prevent the matters identified in the Iraq File Note being material for the purposes of s 21. 3. Third, CIMIC submits that there was nothing that was "known" to Leighton in the period leading up to the inception of the 2011 Policies, as the findings as to Mr Stewart and Mr Wild's state of mind did not reach the level of knowledge and neither person conducted themselves as though the "underlying facts" were true. CIMIC's contention must be rejected once it is appreciated that the matters identified in the Iraq File Note, which the primary judge found Leighton was obliged to disclose under s 21, comprise the fact of the communication, and the substance of what was communicated, and not the underlying facts which went to the truth or otherwise of what Mr Savage communicated. There is no question that Leighton, through Mr Stewart and Mr Wild, was aware of what was communicated by Mr Savage on 23 November 2010 and of the fact that it was Mr Savage who was communicating those matters. That is so irrespective of the evidence of Mr Stewart and Mr Wild that they did not know whether or not the underlying facts were true. 4. Fourth, and relatedly, CIMIC contends that the matters identified in the Iraq File Note, including the fact that they were communicated by someone in the position of Mr Savage, were not matters which could be the subject of the disclosure obligation in s 21 of the Insurance Contracts Act. In this regard, CIMIC distinguishes the matters identified in the Iraq File Note from either: 1. an allegation or communication from a third party who may themselves take the allegation forward to a claim or who themselves may have information that Leighton did not have; or 2. an allegation or communication from a lower employee in the organisation (whose knowledge is not attributed to the company) to a more senior employee or officer whose knowledge would be attributed to the company. 1. CIMIC contends that in (1) or (2) above, the fact of the allegation or communication would be relevant because the allegation or communication itself would suggest the prospect of a claim, or it would convey something of which the company would otherwise have been unaware. By contrast CIMIC submits that where the person making the allegation or communication is themselves someone whose knowledge would be attributed to the company, it is their underlying knowledge, not the fact or content of the allegation or communication having been made, that could be disclosable under s 21. This submission overlaps with, and relies upon, CIMIC's second submission that Leighton's knowledge had to be that of Mr Savage and not Mr Stewart. 2. CIMIC's contention seeks unjustifiably to constrain the proper ambit of s 21. Section 21 operates by reference to a "matter" known to the insured. There is no reason to exclude the matters identified in the Iraq File Note, including that the substantive information was communicated to Mr Stewart by Mr Savage, from the ambit of s 21. As a matter of ordinary English language such information (comprising both the substantive information and the fact that it was conveyed by Mr Savage to Mr Stewart) can be a "matter" known to CIMIC. Further, where, for the reasons set out above, the fact and content of the communication are matters that Leighton could be expected to have known to be relevant to the insurer's decision to accept risk, and if so on what terms, s 21 requires that they be disclosed. Contrary to CIMIC's submission, the fact of the communication of the matters identified in the Iraq File Note could (for the reasons set out above) have the consequence that Leighton could suffer a loss falling within the ambit of the 2011 Policies. 3. The facts and circumstances here show why this should be the case. Matters such as those conveyed by Mr Savage to Mr Stewart, if true, could suggest serious illegality or impropriety. In those circumstances, once the information was communicated by someone in Mr Savage's position to someone in Mr Stewart's position, there was the very real potential that there could be losses to Leighton falling within the ambit of the 2011 Policies, arising from investigations and claims against directors and officers of Leighton or by shareholders. That was so notwithstanding that it was a communication within Leighton, rather than from a third party, and notwithstanding that Mr Savage is likely to have had some knowledge as to whether there was truth in what he communicated to Mr Stewart and whether there was serious illegality or impropriety involved. The matters identified in the Iraq File Note were credible reports from a knowledgeable source who had a senior and responsible role within Leighton. A reasonable person in Leighton's circumstances could, for the reasons set out above, be expected to know that the matters identified in the Iraq File Note may well be disclosed beyond Leighton, to the police, to regulators or to the market. If, by the inception date for the 2011 Policies, Leighton had investigated the matters reported in the Iraq File Note and was satisfied that they were untrue, or that there was no possible illegality or impropriety, then the analysis of materiality for the purposes of s 21 would include the results of that investigation. However, that was not the position here. Rather, matters were reported by Mr Savage to Mr Stewart, Mr Stewart did not know if those matters were true or not and the possibility of illegality or impropriety was very much apparent. Thus, the matters identified in the Iraq File Note themselves went to the risk profile of Leighton. 4. So to hold is consistent with the judgment of Meagher JA (Macfarlan and Emmett JJA agreeing) in Prepaid v Atradius at [99] that "[t]he fact that an opinion is held", either "by the insured or by a third party", is something that may be "known" for the purposes of s 21 and may influence an insurer in its decision to accept a risk, or as to the terms on which it will do so. If an opinion (and not merely the facts upon which it is based) can be such a matter, logically the communication of information that could suggest serious illegality or impropriety (and not merely the underlying information known to the person communicating the information) can also be a matter. 5. Our conclusion is also consistent with the decision of the majority in Khoury v Government Insurance Office of New South Wales (1984) 165 CLR 622 at 632-633; [1984] HCA 55 ("Khoury") that a father's belief that his son was stealing money could be a matter which had to be disclosed to the insurer under the common law. There was nothing in Khoury that limited the obligation of disclosure to the matters comprising the factual foundation for the father's belief. 6. Our conclusion also corresponds with the philosophical basis of the duty of disclosure in an insurance context being "that a true and fair agreement for the transfer of risk on an appropriate basis depends on equality of information", as Mance LJ held (Buxton and Ward LLJ agreeing) in Brotherton at [24]. Once it is accepted that the matters identified in the Iraq File Note were known to Leighton and would suggest to a reasonable person in Leighton's position that the risk to be undertaken by the insurers in the 2011 Policies was increased then the interest in there being "equality of information" required CIMIC to disclose those matters to the 2011 Insurers. 7. Fifth, CIMIC submits that at J[326] (set out above at [135]) the primary judge erred in approaching the question of materiality for the purposes of s 21 on the predicate that the past and proposed payments to the subcontractor would be illegal. That contention should be rejected. Contrary to CIMIC's submission, at J[326] the primary judge did not make any assumption that the matters identified in the Iraq File Note disclosed illegality or impropriety. 8. Whilst at J[326(1)] the primary judge held that the matters identified in the Iraq File Note were "very serious" and "could lead to Losses as defined in the 2011 Policy", neither of those conclusions was predicated upon any finding that the payments described were illegal. Objectively, as the primary judge found at J[300], the matters identified in the Iraq File Note could suggest bribery. It is inherently possible that such matters could give rise to "Losses" as defined in the 2011 Primary Policy. 9. Nor do any of the other matters relied upon by the primary judge at J[326] indicate that her Honour was reasoning from a predicate of illegal conduct having taken place. To say, as her Honour did at J[326(2)], that there "could be no guarantee that such conduct, if true, would avoid detection and public disclosure" is not to presuppose that the conduct disclosed illegality. It is rather the very possibility that it did disclose illegality or impropriety that could give rise to detection and public exposure, and on that account to losses. The reference in J[326(3)] to there having been notifications to the AFP and the ASX of some of the matters identified in the Iraq File Note does not suggest any predicate that there had been illegality. It simply demonstrates, as the primary judge found, how a reasonable hypothetical insured may respond to a communication of the matters identified in the Iraq File Note. Finally, at J[326(4)] the primary judge relied upon the fact that Mr Stewart in fact appreciated that if Mr Savage was telling the truth, it could lead to claims against the company. On a fair reading of the judgment, the primary judge was here relying upon Mr Stewart's subjective appreciation of the possible consequences of the statements being true as being indicative of what a hypothetical reasonable person in the circumstances of Leighton would have known. 10. CIMIC submits that Mr Stewart's reaction to the matters identified in the Iraq File Note should not have been taken into account because he assumed he was being told about a bribe, and that conclusion rested upon his assumption as to what was meant by the term "nominated subcontractor". Mr Stewart's evidence in cross-examination was as follows: "Q. D Stewart asked, "What is the real value of the work?" and he said, "Less than 50% of the payment." Correct? A. Yes, that's correct. Q. When Mr Savage told you that the real value of the onshore work was less than 50% of the value of the payment, you understood that the purpose of the overpayment was illegitimate, didn't you? A. I believe so, yes. Q. You understood the overpayment that he described to be an improper inducement or improper payment that was made so that Leighton Offshore would win the phase 1 contract, correct? A. That's what I understood. Yes. Q. You understood that the overpayment described by Mr Savage was illegal? A. I believe so, yes. Q. You understood that what Mr Savage was describing to you amounted to paying bribes through an overpayment to a subcontractor? A. Well, I don't - I don't think we talked about bribes. It was certainly an overpayment to a subcontractor, and I understood that clearly. Q. I'm asking about what you understood. You understood that what Mr Savage was describing to you amounted to paying bribes to win the Iraq contract through an overpayment to a nominated subcontractor, didn't you? A. I understood it to be an overpayment to a subcontractor. Q. You understood it to be illegal, didn't you? A. It - it appeared to be illegal, yes. Q. You understood it to be illegitimate? A. It appeared to be illegitimate, yes. Q. You understood it to be improper? A. Yes. Q. You understood that it was improper, illegitimate and illegal because it amounted to a bribe? A. Perhaps, yes. I don't know where - I don't know what the nominated subcontractor was going to do with the money. He didn't tell me, and we didn't discuss it. Q. But you figured it out, didn't you, Mr Stewart? A. I - I agree with you it was illegitimate and illegal. I agree. I'm not saying I don't agree with that. But what - what the process was beyond the payment, I don't know, and he didn't discuss it." 1. As is clear from this passage of evidence, Mr Stewart attached particular significance to the fact that a subcontractor was being paid more than twice as much as the real value of the work and did not focus his attention on where that payment would go. Having regard to that, the evidence does not support CIMIC's contention that Mr Stewart's assumption that the matters identified in the Iraq File Note appeared to be illegal and improper started with, or rested upon, his interpretation of the term "nominated subcontractor". Nor should his reaction be dismissed as "speculation". Irrespective of whether his interpretation of the term "nominated subcontractor" was correct, and irrespective of whether he knew or enquired as to what was to be done with the money Leighton had paid or may in the future pay, the primary judge was entitled to have regard to Mr Stewart's reaction as supportive of a conclusion that a reasonable person in Leighton's position prior to inception of the 2011 Policies would have concluded that the matters identified in the Iraq File Note, if true, could lead to losses covered by the 2011 Policies. 2. Sixth, CIMIC submits that the primary judge erred in taking into account what occurred after discovery of the Iraq File Note in November 2011 in support of her Honour's conclusion as to what a reasonable person in the position of Leighton could be expected to know to be relevant to an insurer's decision whether to accept the risk or on what terms in the period leading up to inception of the 2011 Primary Policy: at J[326(3)]. As to this, the evidence of Andrew Johns, Leighton's Chairman in this pre-inception period, was that he was shocked when he saw the allegations in the Iraq File Note, and that on the same day that he was shown it he arranged a meeting with Mr Tyrwhitt and Mr Osborn. On that day they agreed that Leighton would engage its external solicitors to provide legal advice in connection with the Iraq File Note. The decision to refer the Iraq File Note to the AFP was reached very quickly. Mr Johns' evidence was that "having regard to the seriousness of the allegations in the Iraq File Note, [he] believed that Leighton ought to report it to the relevant authorities for investigation." His oral evidence was that he took the matter of the Iraq File Note "very, very seriously" and that he was "very concerned" when he was advised about the Iraq File Note. 3. It is obviously correct, as CIMIC submits, that the circumstances at that time were to some extent different to what they would have been in the period up to 30 June 2011, including because Mr Savage and Mr Wild were no longer employed by Leighton (although Mr Waugh was employed by Leighton as at 7 November 2011 and Mr Stewart did not formally leave Leighton until 19 November 2011 albeit that he had been invited to resign on 24 August 2011 and had his last day in the office on 25 August 2011). The personnel in key roles at Leighton also differed as between the period up to 30 June 2011 and that in November 2011. In November 2010 Mr King was the CEO of Leighton, with Mr Stewart holding that role from January to August 2011 and Mr Tyrwhitt replacing him. The Chairman of the Leighton Board prior to 24 August 2011 was Mr Mortimer, with Mr Johns replacing him. Further, the Iraq File Note was discovered in November 2011 in the context of a document review for ASIC, nearly a year after its creation, rather than through disclosure by Mr Stewart, Mr Wild or Mr Savage at some time before 30 June 2011. 4. Despite the change in personnel, and other differences identified above, what actually occurred in November 2011 logically supports the primary judge's conclusion as to what a reasonable person in Leighton's position at the time prior to the inception of the 2011 Policies could be expected to know as to the materiality of the matters identified in the Iraq File Note. It underscores that, objectively, Leighton could be expected to know that the matters so identified could give rise to significant "Losses" to Leighton falling within the 2011 Policies. Further, as submitted by AIG, CIMIC does not identify any "pre-inception knowledge" which would have led a reasonable person in Leighton's circumstances to react other than how Leighton did in fact react in November 2011. 5. Seventh, CIMIC submits that the primary judge erred in having regard to Mr Stewart's interpretation of the statements made by Mr Savage and set out in the Iraq File Note when concluding that there was a duty of disclosure under s 21. More particularly, CIMIC contends that the primary judge relied, for the purposes of s 21, upon Mr Stewart's evidence in cross-examination that he understood that what Mr Savage was saying amounted to improper and illegal payments. As set out above, the primary judge's reliance upon Mr Stewart's appreciation of the seriousness of the matters identified in the Iraq File Note logically supported an inference as to what Leighton could be expected to know in the period up to inception of the 2011 Policies. The fact that someone in Mr Stewart's position actually appreciated that the matters identified in the Iraq File Note could lead to claims against Leighton logically supports an inference that a reasonable person in Leighton's position could also be expected to have known that. 6. CIMIC's overarching contention that the primary judge erred in finding that s 21 of the Insurance Contracts Act required that the matters identified in the Iraq File Note be disclosed to the 2011 Insurers is rejected. Grounds 1, 3, 4 and 5 of CIMIC's notice of cross-appeal in the Berkley Appeal are rejected. 7. It follows from our conclusions set out above that her Honour did not err in finding that Leighton made an actionable misrepresentation in the 2011 Proposal, signed on 27 May 2011. The primary judge recorded that in the 2011 Proposal, Leighton represented that "after having made enquiries of all appropriate staff, it was not aware of any facts which might give rise to a claim against any of its directors or officers, apart from facts which were included." Nothing was included as regards the statements made by Mr Savage to Mr Stewart as set out in the Iraq File Note. CIMIC's submissions as to this were derivative on its submissions as to non-disclosure under s 21. Its failure to show that the primary judge erred as regards s 21 necessarily means that its contention that the primary judge erred in finding a misrepresentation is also rejected. Ground 7 of CIMIC's notice of cross-appeal in the Berkley Appeal is rejected. Conclusion as to Issue 6 1. For these reasons, grounds 1, 3, 4, 5 and 7 of CIMIC's notice of cross-appeal in the Berkley Appeal are rejected. Issue 7: Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act? 1. This issue arises from CIMIC's notice of cross-appeal in the Berkley Appeal. Specifically, CIMIC contends, by grounds 2 and 6, that the primary judge erred in finding that each of the 2011 Insurers was entitled, pursuant to s 28(3) of the Insurance Contracts Act, to reduce their liability in respect of the Company Securities Claims to nil. In support of these grounds CIMIC contends that the primary judge made no findings as to what any of the 2011 Insurers would have done "had the Savage Statements (and no other matters) been disclosed" and that it was not open on the evidence for the primary judge to make any such findings. CIMIC further contends, by ground 8, that the primary judge erred in finding that each of the 2011 Insurers was entitled, pursuant to s 28(3), to reduce their liability to nil on account of CIMIC's misrepresentation. In this part of the judgment we consider only the factual issues arising as to s 28(3). The issues raised as to the construction of s 28(3) are considered below. 2. CIMIC's submissions misfire to the extent that they rely upon a characterisation of the "matter" which the primary judge found that CIMIC was required to disclose under s 21(1) of the Insurance Contracts Act as being the Savage Statements. As set out above, the matter which the primary judge found ought to have been disclosed under s 21(1) was the matters identified in the Iraq File Note, including that the substantive matters were communicated by a person in the position of Mr Savage. Section 28 of the Insurance Contracts Act 1. Section 28 of the Insurance Contracts Act is set out above at [24]. It is helpful to reiterate it here: 28 General insurance (1) This section applies where the person who became the insured under a contract of general insurance upon the contract being entered into: (a) failed to comply with the duty of disclosure; or (b) made a misrepresentation to the insurer before the contract was entered into; but does not apply where the insurer would have entered into the contract, for the same premium and on the same terms and conditions, even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into. (2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract. (3) If the insurer is not entitled to avoid the contract or, being entitled to avoid the contract (whether under subsection (2) or otherwise) has not done so, the liability of the insurer in respect of a claim is reduced to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made. 1. There are two questions under s 28. First, whether the insurer would have entered into the contract for the same premium and on the same terms if the relevant non-disclosure or misrepresentation had not occurred. Second, whether the insurer has shown that the terms upon which it would have entered into the contract would have led to a reduced liability to indemnify CIMIC in respect of the various losses that occurred. Applicable principles 1. The insurer bears the burden of proving that it would not have entered into the contract for the same premium and on the same terms as it did if the matter that ought to have been disclosed had in fact been disclosed: Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062 at 77,154 (Beach J). By analogy with the approach taken to s 54 of the Insurance Contracts Act, s 28(3) requires proof of what the insurer would have done if the non-disclosure or misrepresentation had not occurred. It is not sufficient for the insurer to prove that it lost a chance to reduce its liability: Moltoni Corporation Pty Limited v QBE Insurance Limited (2001) 205 CLR 149; [2001] HCA 73 at [16]-[20]. 2. As set out in relation to s 28(3) by Meagher JA (Macfarlan and Emmett JJA agreeing) in Prepaid v Atradius at [71]: "This provision requires an inquiry as to the position the insurer would have been in if the relevant misrepresentation had not been made. It is the same as would be made if the insurer was claiming damages for misrepresentation in the amount by which it seeks to have the insured's claim reduced. Accordingly, it must establish on the balance of probabilities what it says its position would have been if the misrepresentation had not occurred. That is so notwithstanding that the hypothesis upon which the reduction of liability is based is not an historical fact." 1. In Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2014] NSWCA 440 ("Atradius Credit"), Macfarlan JA (Meagher JA and Sackville AJA agreeing) held at [71] that it was not incumbent upon an insurer: "… to prove each step that would have been taken within its organisation in the hypothetical circumstance that s 28(3) of the Insurance Contracts Act required to be addressed. Section 28(3) does not specify any particular mode of proof that need be adopted by the insurer. It is sufficient for it to prove on the balance of probabilities what the outcome would have been in the hypothetical circumstance." 1. As Sackville AJA held in Stealth Enterprises v Calliden at [87], evidence as to what an insurer would have done had a particular matter been disclosed has to be considered with an awareness that the evidence is given through the "prism of hindsight". Thus, such evidence needs to be assessed not simply on the basis of the credit of the witness, but also by reference to the objective probabilities. Background facts and the primary judge's findings as to s 28(3) 1. As no party made any submissions about an intermediate possibility whereby the 2011 Insurers' liability was reduced to something other than nil, the primary judge was presented with a binary choice: at J[332] and [366]. There was no suggestion on appeal that the position was otherwise. Her Honour's ultimate finding, at J[365], was: "I consider the evidence supports the 2011 Insurers' case that, had there been disclosure of the information concerning the Iraq File Note, the 2011 Insurers would not have entered into the 2011 Policies on the same terms, without including liability exclusions for losses attributable to the Iraq File Note. The precise form of those exclusions is not relevant to that conclusion; some sort of action would have been taken in response to the notification. CIMIC's submissions largely avoided this point and do not go as far as suggesting that no action would have been taken, such that the terms of the 2011 Policy would have been exactly the same." (Emphasis in original.) 1. As is plain from that passage, the primary judge addressed the issue arising under s 28(3) on the basis that the factual premise for the counterfactual enquiry was "disclosure of the information concerning the Iraq File Note". Read in the context of her Honour's findings at J[322], we construe this as referring to the "matters identified in the Iraq File Note", which the primary judge found ought to have been disclosed, also described by the primary judge as the "Iraq File Note facts", at J[328]. This has some significance given that, in the course of analysing the evidence relied upon by the 2011 Insurers, the primary judge used a range of different terminology to refer to the relevant premise for the counterfactual enquiry under s 28(3). On a fair reading of the judgment, it is apparent that there was no mismatch between the premise for the counterfactual enquiry undertaken under s 28(3) and that which her Honour found ought to have been disclosed under s 21. The different terminology used at times in the course of analysing the evidence does not indicate otherwise. As is clear from the factual chronology set out above, Leighton did not disclose the matters identified in the Iraq File Note prior to the inception date for the 2011 Policies. 2. We turn now to consider the positions regarding each of the 2011 Insurers. AIG The evidence before the Court 1. For the 2010 year, AIG was Leighton's sole primary insurer for a total indemnity of $20 million. In June 2011, AIG offered instead to co-insure Leighton on the primary layer for $15 million. Adam Suplina, who held the position "Head of Underwriting - Financial Lines - Pacific" and "Deputy Head of Financial Lines - Australia", was responsible for assessing the underwriting risk for AIG's major accounts. Mr Suplina was the underwriter of Leighton's account from around 2005 "until the 2011-2012 renewal". Mr Suplina explained that he felt that at June 2011 AIG needed to reduce its exposure to Leighton. Two matters of particular significance informing AIG's decision to reduce its exposure to Leighton, according to Mr Suplina, were a downgrade in Leighton's profit forecast and the prospect of a consequential possible class action, both of which had been publicly reported since the previous renewal. Neither of those matters had anything to do with the Iraq File Note. 2. For the year commencing 30 June 2012 ("2012 year") AIG proposed terms different to those it had proposed in the 2011 Primary Policy. By email of 24 May 2012 AIG offered, rather than a renewal, an extension of the existing limit for 12 months, with no new limit available, for an additional premium. The email notifying Marsh of these proposed terms stated that the decision had been reached on a number of bases, including "Further developments with respect to the Middle East." When Leighton indicated that that was not acceptable, AIG proposed alternate renewal terms that were "based on ensuring that Leighton 'house' as many matters as possible with the current [2011 Policy]." When Leighton refused to accept those terms AIG ceased to be the primary insurer. Instead, as set out at J[341], AIG agreed to underwrite an excess policy in the 2012 year for $25 million in excess of $200 million, with an express exclusion in the following terms: "It is agreed that Section 5 Exclusions - Applicable to All Insuring Clauses is amended by adding the following: (c) based upon, arising from or in consequence of the circumstances cited in the document titled "LEIGHTON HOLDINGS LIMITED – D&O Premium Summary / Claims Review" Policy Period 2010 – 2011 Claim / Circ Notified item 2. Alleged Bribery, Policy Period 2010 – 2011 Claim / Circ Notified item 6. Profit downgrade, and/or Policy Period 2011 – 2012 Claim / Circ Notified item 3. Alleged Bribery, or the same or any substantially similar fact, Wrongful Act or circumstances underlying or alleged therein." 1. Mr Suplina gave evidence of what he would have done had he become aware of an email of 2 April 2012 at 11.04am from Carol Makhoul (which he refers to as the "Bribery Notification") and the Iraq File Note prior to the renewal of the 2011 Primary Policy. He saw and read the Iraq File Note in around April 2012. The matters identified in Ms Makhoul's email included that an executive of Leighton made an allegation that aspects of two construction contracts in each of Iraq and Malaysia in fact constituted bribes to government officials by way of overpayment for services provided by wholly-owned government entities. Ms Makhoul's email said that no action was taken at the time because the allegation was not believed, that the Iraq File Note had come to light later as part of an ASIC investigation into the profit downgrade and that it had been referred to the AFP who were conducting an investigation. It also stated that when the investigation was announced the share price only dropped by 2% and quickly recovered "so a shareholder class action flowing from the issue is presently seen to be unlikely." Ms Makhoul said that if charges are laid one would expect defence costs "in the order of AU$2-4M with [AIG's] share of that being 50%." 2. Mr Suplina said that, if he had become aware of the Bribery Notification and the Iraq File Note prior to inception of the 2011 Primary Policy, there was "no chance" that he would have recommended or agreed to renew Leighton's D&O policy on the same terms as it did for the 2011 year. He would have required, at least, a "bribery exclusion" or an exclusion of any claim based upon, arising from or in consequence of the "Alleged Bribery Claim, or the same or any substantially similar fact, Wrongful Act or circumstances underlying or alleged therein". His evidence was that his position would not have been different if he had been told by Marsh or Leighton either that the allegations recorded in the Iraq File Note were not true, or that they did not believe them to be true. For him, "[o]nce an allegation was made, my concern was to ensure that AIG was protected, and I would have done so by excluding any claims that might arise from the Bribery Notification and the Iraq File Note from cover in 2011-2012." 3. In cross-examination, Mr Suplina said: "For the bribery, talking about the bribery, yes, a hundred percent I would've put a specific matters or a bribery and gratuities exclusion." 1. In re-examination, when asked why he had given evidence that the "Iraq circumstances" would have been treated differently to the other notifications he knew about in the 2011 year, he said: "From a bribery – it's criminal – goes to the – I mean, the conduct on what it is, it's potentially criminal in its application. It wasn't our determination whether it was, but there was allegations out there. Conversely, a continuous disclosure breach is not necessarily criminal, and, you know, these things can happen cause you haven't told in, in time and manner, when you're disclosing something. But when it comes to a bribery matter it's potentially illegal, something which we give zero tolerance to, and plus, there usually is a conduct exclusion in the wordings." The primary judge's findings 1. The primary judge, at J[343], accepted Mr Suplina's evidence that an allegation concerning bribery was something which AIG gave zero tolerance to. The primary judge found that this was commercially reasonable. The primary judge, at J[345], did not accept that the assumptions that were given to Mr Suplina were inappropriate or not demonstrated. Her Honour described those assumptions as including, in effect, that before 30 June 2011 Leighton had taken the steps that it did between November 2011 and February 2012. 2. At J[346] the primary judge found: "Given the changes AIG implemented in response to earlier notifications, and what it did after the 2012 Notification, I consider it likely that AIG would have avoided the risks associated with the 2012 Notification, had it been disclosed." 1. The primary judge also found, at J[347], that Chubb, Catlin and Liberty would have had the benefit of adopting or endorsing AIG's terms, with an exclusion for the Iraq-related matters. Chubb, Catlin and Liberty would also have had the opportunity to assess their own positions. Chubb The evidence before the Court 1. Chubb was the second primary insurer for the 2011 year. Benedict Ingram, Chubb's Chief Underwriting Officer, was the final sign off on Chubb's agreement to co-insure 50% of the primary layer of D&O Insurance for the 2011 year and for the primary insurance policy for the 2012 year ("2012 Primary Policy"). Mr Ingram's evidence went to what he would have done if he had been informed of the existence and/or contents of the Iraq File Note in the course of the 2011 renewal process. He said that he would have read the Iraq File Note as suggesting a serious risk that Leighton had secured large contracts through the payment of substantial bribes. He would have regarded that possibility as significantly impacting upon the risk which it was proposed that Chubb assume, because it would expose Chubb to claims under the Foreign Corrupt Practices Act, 15 USC §§ 78dd-1 (1977), other criminal actions, investigations by the AFP and ASIC and securities class actions. He said it would also have indicated a potential systemic issue which could lead to future bribery actions and other litigation. Mr Ingram believed that any offer of cover for the 2011 year would have been reduced: "… at the very least, to that which occurred following the February 2012 disclosure, that is, by the inclusion of a "Specific Matters" exclusion, excluding from the scope of cover under the 2011/2012 Policy any claim arising from the payment of the bribes or proposed bribes referred to in the File Note." 1. He said that the Iraq File Note itself would have suggested a very serious risk of claims. He would not have regarded that risk as being eliminated unless and until he "could be satisfied that Mr Savage's account had been properly investigated and that the results of those investigations had sufficiently established that there had been no impropriety of the kind recorded in the File Note". His evidence was also that he was not routinely sent claims notifications on individual accounts but that, if a claim was deemed serious, it would be elevated for his attention by the local and regional underwriters and claims staff. 2. Matters relating to the Iraq File Note were reported to him but Chubb was not given a copy of the Iraq File Note in the 2012 renewal process. Chubb's offer of cover for the 2012 year included a specific matters exclusion for any claims in "any way connected with" alleged bribery in the 2010 or 2011 Policy Periods which encompassed any claims relating to the matters identified in the Iraq File Note. Even if he had been satisfied that "it was likely that Mr Savage was fabricating the allegations in the Iraq File Note" that would not have eliminated the risk of claims arising from the Iraq File Note if it became public. In light of that risk, he would have offered terms no broader than those in fact offered in the 2012 year. The primary judge's findings 1. The primary judge found that employees working below Mr Ingram were part of the decision-making process and would have been responsible for what information was forwarded to Mr Ingram, and that it was not necessary for Chubb to call all those involved in Chubb's decision as to the terms on which cover would have been offered, if at all, for the 2011 year. Mr Ingram's evidence was sufficient to establish the likely approach of Chubb. The primary judge held, at J[351], that the allegations were "objectively of a nature that would cause an insurer to take steps to exclude ongoing liability, as Chubb in fact did later." Her Honour accepted that Chubb would not have taken on the risk, had there been a disclosure. Catlin The evidence before the Court 1. For the 2011 year, Catlin's 2011 First Excess Policy included a Continuity Date of 30 June 2011 but did not include any endorsement excluding the matters that were in fact notified in the process leading to that policy. For the 2012 year, Catlin included, by way of endorsement to its 2012 Excess Policy, an exclusion in similar terms to that of Chubb set out at [206] above. Catlin led evidence from Timothy Powell, the responsible underwriter for Catlin's 2011 First Excess Policy. He said that, as regards the matters that were in fact notified, he regarded Catlin's position as being sufficiently protected by the inclusion of the 30 June 2011 Continuity Date, given his understanding that those matters had been notified to the 2010 Insurers. 2. His evidence was that if there had been disclosure of what he called the "Iraq Information", he would have regarded that information as being "circumstances that may give rise to loss to which a D&O insurance policy could respond." By the "Iraq Information", he was referring to what he understood from the 2012 Notification, being that Leighton was aware of a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws, that the possible breach related to payments that may have been made by a Leighton subsidiary company in connection with work to expand offshore loading facilities for Iraq's crude oil exports and that it was not then known whether there had been any wrongful or illegal conduct or whether there would be any adverse financial consequences for Leighton. 3. Mr Powell said that if Catlin had been notified of the "Iraq Information", it would not have entered the 2011 First Excess Policy on terms that would mean that it would have had to bear the related risk. He said that if Leighton had notified the 2010 Insurers and there was "consensus with the broker that current insurers bore the risk" then it is likely he would have relied upon the notification provided to the 2010 Insurers, the exclusion for prior claims and circumstances and the 30 June 2011 Continuity Date in the 2011 First Excess Policy. In that scenario he would have entered into a policy on the same terms as the 2011 First Excess Policy. Having seen AIG's commercial list response which indicated that if there had been disclosure of matters relating to the Iraq File Note AIG would have included an endorsement excluding liability for loss attributable to what were described as the "Iraq Facts", Mr Powell said that, in that scenario and even assuming that there had been notification to the 2010 Insurers, he would have caused Catlin to have quoted and bound cover for the 2011 year on the same terms as Catlin did offer for the 2011 year but also including an exclusion similar to that which the AIG commercial list response indicated would have been included in AIG's 2011 Primary Policy. The primary judge's findings 1. The primary judge found, at J[359], that Catlin would have had the benefit of AIG's exclusion in the 2011 Primary Policy and that Catlin would also have protected itself in other ways had there been a pre-inception disclosure. Liberty The evidence before the Court 1. Liberty included an exclusion in the 2012 Second Excess Policy it held with Leighton in the same terms as Catlin. Liberty called evidence from two of its underwriters for the 2011 Second Excess Policy, Christopher MacLean and Marcus Thomas. Their evidence was that they would not have been prepared to offer cover without an exclusion, even if the primary insurer had not included one. The primary judge's findings 1. The primary judge accepted that Liberty would have required the 2011 Second Excess Policy to contain a specific kind of exclusion, covering matters related to the Iraq File Note, had a disclosure been made. In addition, the primary judge found that Liberty would have had the benefit of AIG's 2011 Primary Policy terms that excluded liability relating to the matters identified in the Iraq File Note. The primary judge, at J[364], rejected CIMIC's submission that the assumptions given to Mr Thomas and Mr MacLean were inappropriate or not demonstrated. Consideration 1. CIMIC's overarching contention is that the 2011 Insurers did not satisfy their onus of establishing that, if they had been aware of the matters that the primary judge found ought to have been disclosed, they would not have provided cover on the same terms and conditions as they did for the 2011 year. In support of this overarching contention, CIMIC makes five core submissions. 2. First, CIMIC criticises the evidence adduced by the 2011 Insurers for the purposes of s 28(3) on the basis that that evidence was not premised upon assumptions which adequately reflected the "matter" that the primary judge found ought to have been disclosed under s 21(1). CIMIC contends that the primary judge ought not to have proceeded on the basis that the evidence adduced by the 2011 Insurers would have been the same had it been premised upon the correct assumption. CIMIC contends that, as the 2011 Insurers did not seek to lead evidence from their witnesses which reflected the different permutations of the "matter" which ought to have been disclosed, the Court ought to proceed on the basis that evidence on assumptions different to those addressed in the various witnesses' evidence would not have assisted the 2011 Insurers' cases. In support of this submission, CIMIC relies upon Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 ("Ferrcom"). 3. Second, CIMIC criticises the failure of the 2011 Insurers to call evidence from all persons involved in making their respective decisions whether, and on what terms, to advance insurance cover for the 2011 year. 4. Third, CIMIC submits that the 2011 Insurers could not properly rely upon what in fact occurred in the 2012 year as indicating what would have happened in the 2011 year given that the actual 2012 Notification was not the same as what the primary judge found ought to have been disclosed prior to inception of the 2011 Policies. In this regard, CIMIC relies upon the fact that the 2012 Notification included reference to the AFP Referral, the AFP investigation and the 2012 ASX Media Release. Moreover, CIMIC submits that, by 30 June 2012, the 2011 Insurers were concerned to avoid looking like "dopes" for having "three years in a row of losses on the primary" whereas that was not the same situation that faced the 2011 Insurers as at 30 June 2011. 5. Fourth, CIMIC submits that there is an "obvious error" with the primary judge's reliance, at J[351], upon the fact that "the allegations were objectively of a nature that would cause an insurer to take steps to exclude ongoing liability." CIMIC submits that the focus under s 28(3) must be on what "the" insurer would have done, not upon what a hypothetical insurer would have done. 6. Fifth, CIMIC submits that the primary judge erred in having regard to matters, other than the matter which s 21 required the insured to disclose, as part of the counterfactual enquiry for the purposes of s 28(3). Thus, CIMIC submits, the primary judge should not have taken into account events, such as the AFP Referral or the 2012 ASX Media Release, that may have followed or coincided with disclosure of the matters identified in the Iraq File Note to the 2011 Insurers. Further, CIMIC submits that when considering the position of 2011 Insurers other than AIG, the primary judge should have disregarded her Honour's finding that AIG, as a 2011 Primary Insurer, would have offered terms including an endorsement excluding liability for claims relating to the matters identified in the Iraq File Note. In oral submissions, senior counsel for CIMIC characterised such matters as "plainly extraneous" to the enquiry under s 28(3) which must proceed "solely on a failure to make disclosure to the particular insurer or the making of a misrepresentation to the particular insurer." 7. The question whether each of the 2011 Insurers proved, on the balance of probabilities, what would have happened had the matters identified in the Iraq File Note been disclosed prior to the inception date for the 2011 Policies, being 30 June 2011, depends upon an assessment of the affidavit and oral evidence relied upon by the 2011 Insurers in the overarching factual context. This includes the evidence of what occurred in June 2012 after the 2012 Notification, the character of the matters identified in the Iraq File Note and the objective probabilities having regard to the factual circumstances. As the primary judge correctly found, those matters strongly support the conclusion that the 2011 Insurers would not have entered into D&O policies on the same terms and conditions, and for the same premium, if there had been disclosure as required by s 21 and had no misrepresentation been made. 8. We address CIMIC's first and second core submissions at [225] below. 9. As to CIMIC's third submission, we have concluded that evidence as to how the 2011 Insurers responded to the 2012 Notification is also relevant, albeit not in any sense determinative, for the purposes of the counterfactual enquiry under s 28(3). This is so notwithstanding that the 2012 Notification was not in the form of a notification of the matters identified in the Iraq File Note and that the 2011 Insurers were necessarily in a different position as at 30 June 2012 to the position a year earlier. Again, what is necessary is that the probative value of the evidence as to what occurred in June 2012 is assessed having regard to those differences. 10. As to CIMIC's fourth submission, by way of objective probabilities, we agree with the primary judge that it is commercially reasonable that an insurer under a D&O policy, whether a primary policy or an excess layer policy, may respond differently to an allegation of facts which may suggest bribery as opposed to a notification of a profit downgrade. We also agree that the matters identified in the Iraq File Note were objectively of a character that would likely cause an insurer to take steps to exclude ongoing liability. Contrary to CIMIC's submission (set out above), we consider that the objective seriousness and the character of the matters identified in the Iraq File Note, and an objective assessment of how a prospective insurer under a D&O policy would probably respond to those matters, is relevant by way of context in assessing the evidence before the Court. It is an objective probability, against which that evidence should be considered: Stealth Enterprises v Calliden at [87] (Sackville AJA). Objectively, it is difficult to see a logical reason why an insurer would not take steps to exclude ongoing liability having regard to the nature of the policies, being D&O Insurance, and bearing in mind the obvious prospect that the matters identified in the Iraq File Note could lead potentially to significant losses falling within the ambit of such policies. 11. Contrary to CIMIC's fifth submission, when considering what would have happened if Leighton had complied with its duty of disclosure under s 21, or if there had been no misrepresentation, the Court is entitled to take into account facts beyond the required disclosure itself. As set out above, the relevant enquiry under s 28(3) is as to what would have happened in the hypothetical scenario that there had been proper disclosure as required by s 21, or no misrepresentation. There is nothing in s 21 that suggests that this requires everything other than the disclosure itself to be ignored. Further, to exclude anything other than the fact of disclosure would be to conduct the hypothetical enquiry under s 28(3) in a highly artificial manner. Thus, the primary judge was entitled to have regard to what her Honour was satisfied would have happened if Leighton had disclosed the matters identified in the Iraq File Note to the 2011 Insurers, as it ought to have done, prior to the inception date for the 2011 Policies. 12. Returning now to CIMIC's first and second submissions, we are mindful that, as held by Macfarlan JA (Meagher JA and Sackville AJA agreeing) in Atradius Credit at [71], s 28(3) does not specify any particular mode of proof. In our view, the fact that the evidence adduced by each of the 2011 Insurers may have been predicated upon assumptions which do not precisely reflect the matters identified in the Iraq File Note does not deny the probative value of that evidence. Nor should the Court, on that account, decline to infer that the various witnesses would have responded to the matters identified in the Iraq File Note in the same manner that they indicated in their evidence on the assumptions given to them. 13. The present case is very different from Ferrcom, where counsel for the insured did not lead any evidence going to a particular factual question (whether an endorsement would have been acceptable to the insured). At the point when the witnesses for the 2011 Insurers gave evidence, it was not known what, if anything, the primary judge would find ought to have been disclosed under s 21. In those circumstances, the obvious explanation for the fact that each of the 2011 Insurers did not seek to lead evidence from their witnesses to address all "permutations" of what might be found to be disclosable under s 21 is that that would have been cumbersome and most likely confusing. Rather, the evidence of the witnesses for the 2011 Insurers, in various ways, explained what they would have done if they had been aware of certain information linked to the matters identified in the Iraq File Note, and explained what matters would be important in their decisions as to the terms on which they would have offered D&O Insurance for the 2011 year. That evidence enabled the primary judge to reach an informed and reliable judgment as to how the 2011 Insurers would likely have responded if they had been aware of the matters identified in the Iraq File Note. Having said that, we have assessed the evidence of the witnesses for the 2011 Insurers on the basis that there were some material differences between the assumptions given to the witnesses and the matters identified in the Iraq File Note. 14. We have carefully considered the evidence adduced by the 2011 Insurers, and CIMIC's submissions. Having done so, we reject CIMIC's criticisms of the primary judge's conclusions. We agree that each of AIG, Chubb, Catlin and Liberty established that they would not have entered into the insurance contracts on the terms that they did for the 2011 year if Leighton had disclosed the matters identified in the Iraq File Note. We set out below a summary of key aspects of the evidence that are of particular significance to our conclusion, with reference to each of the 2011 Insurers. AIG 1. As mentioned, Mr Suplina's evidence addressed both the Bribery Notification and the Iraq File Note. As CIMIC correctly submits, the Bribery Notification, in its terms, differed in some material respects from the matters identified in the Iraq File Note. However, in Mr Suplina's evidence, he identifies what he took from the Iraq File Note itself. He also explains what matters arising out of the Iraq File Note and the Bribery Notification were particularly important to him. In this way, his evidence supports an inference as to what he would have done had he been aware of the matters identified in the Iraq File Note. 2. Mr Suplina saw the Iraq File Note in around April 2012 and understood then that it had been prepared by Mr Stewart. His evidence was that he was concerned that "very senior executives of Leighton" were referred to in the Iraq File Note. He characterised circumstances "of the kind mentioned in the Iraq File Note" as "allegations of criminal conduct, or serious misconduct, by senior executives". This evidence plainly relates to what was apparent to him from the Iraq File Note itself. He was not challenged on this evidence. He said that he expected that circumstances of that kind, being of the kind mentioned in the Iraq File Note, would be disclosed to him as they "could very well lead to claims against the executives that AIG was being asked to insure." Again, this evidence relates to what was identified in the Iraq File Note. Again, he was not challenged on this evidence. 3. Significantly, this evidence was given in relation to the Iraq File Note and not by reference to the Bribery Notification. It thus closely matched the matter which the primary judge found ought to have been disclosed under s 21. It is also clear that Mr Suplina's evidence that AIG had zero tolerance for bribery was applicable to the matters identified in the Iraq File Note, and not merely to the Bribery Notification. Mr Suplina characterised matters of the kind mentioned in the Iraq File Note as allegations of criminal conduct or serious misconduct. His reference to criminal conduct, logically, must have included bribery. 4. CIMIC submits that this evidence is not probative of what would have happened had there been the required disclosure, or no misrepresentation, because Mr Suplina's evidence was given by reference to the Iraq File Note itself, rather than by reference to the matters identified in the Iraq File Note. That submission should be rejected. Mr Suplina's evidence addressed the substance of the matters identified in the Iraq File Note. It is highly probative of what he would have done had those matters been disclosed to him prior to inception of the 2011 Primary Policy. 5. CIMIC also submits that Mr Suplina's evidence is not based upon an appropriate assumption because it is predicated upon him seeing the Bribery Notification as well as the Iraq File Note. That submission should also be rejected. As we have set out above, Mr Suplina's evidence is probative of how he would have reacted to the substance of the matters identified in the Iraq File Note, albeit that it also addresses his reaction to the Bribery Notification which included information going beyond those matters. 6. Mr Suplina's evidence was also that by early-June 2011, he felt that AIG needed to reduce its exposure and that the risks associated with the Leighton account, to his mind, had worsened by reason of the matters set out at [195] above, and that he now perceived Leighton as a "troublesome risk that was tough to underwrite." That suggests that Mr Suplina's threshold for exposure to a risk such as that arising from the matters identified in the Iraq File Note was not high. That further supports the primary judge's conclusion. 7. Mr Suplina's evidence as to his concern in 2012 to "ensure that AIG was protected", and the matters set out above, support a conclusion that he would have responded in the same way as he did in June 2012 even if he been aware only of the matters identified in the Iraq File Note. Indeed, Mr Suplina's evidence as to the significance of the allegations having been made indicates that he would have excluded claims had he been aware of those matters alone. Having regard to his evidence, AIG proved on the balance of probabilities that it would have excluded risk relating to the matters identified in the Iraq File Note if those matters had been disclosed. Thus, bearing in mind that the issue was presented to the primary judge as being binary, its liability is reduced to nil under s 28(3). 8. CIMIC contends that the primary judge erred, at J[345], in characterising the assumptions given to Mr Suplina as being, in effect, that "Leighton had taken the steps it did between November 2011 and February 2012 before the inception of the 2011 Policy" in the course of rejecting CIMIC's submission that the assumptions given to Mr Suplina were "inappropriate or not demonstrated". For the reasons set out above, we consider that AIG satisfied its burden of proof under s 28(3) without the need to rely upon any such assumptions. 9. In any event, the primary judge did not err in so characterising the assumptions. It is implicit in the primary judge's analysis at J[345] that her Honour found that there would likely have been disclosure to the market and to the AFP, and an AFP investigation, if there had been disclosure of the matters identified in the Iraq File Note prior to the inception of the 2011 Policies. It was open to the primary judge to find that Leighton would probably have taken those steps if Mr Stewart had brought the matters identified in the Iraq File Note to the attention of Leighton's Chairman, Leighton's lawyers, or those responsible for risk within Leighton before 30 June 2011, and that that would likely have happened in circumstances in which Leighton disclosed those matters to the 2011 Insurers as required under s 21 or did not make any misrepresentation in the 2011 Proposal. In this regard it is significant that the 2011 Proposal was signed by the then Chairman and Company Secretary of Leighton, Mr Mortimer and Mr Moir respectively. It could thus be inferred that Mr Mortimer would have been informed of the Iraq File Note, if not earlier than through the 2011 Proposal (which was signed by him on 27 May 2011), and that that would have prompted similarly urgent activity, within days, as followed after Mr Johns became aware of the Iraq File Note in November 2011. 10. In any event, we consider that appropriate consideration within Leighton of what should be disclosed in the 2011 Proposal would necessarily have involved consideration, beyond Mr Stewart and Mr Wild, of the significance of the matters identified in the Iraq File Note in the period prior to inception of the 2011 Policies. It can be inferred that that consideration, which on the counterfactual for the purposes of s 28(3) necessarily involved a conclusion that the matters identified in the Iraq File Note should be disclosed to the 2011 Insurers, would have led to a chain of events similar to that which in fact followed the discovery of the Iraq File Note in November 2011. Thus, the primary judge did not err in finding that those later events provided an indicator of what would likely have happened had there been the required disclosure under s 21. 11. CIMIC submitted that no such inference can be drawn because any consideration of the Iraq File Note within Leighton prior to June 2011 would have involved Mr Stewart and Mr Savage, both of whom had direct knowledge of the matter. However, when the Iraq File Note came to light in November 2011, the referral to the AFP and the issuing of the 2012 ASX Media Release were not deferred pending investigation of the underlying facts. We do not consider that the differences in personnel working at Leighton as between June 2011 and November 2011 preclude the inference that Leighton would have treated the matters recorded in the Iraq File Note, and the potentially serious illegality or impropriety recorded therein, with the same degree of seriousness and urgency if they had been considered prior to inception of the 2011 Policies. Chubb, Catlin and Liberty 1. As to the position of Chubb, Catlin and Liberty, as mentioned above, the primary judge found at J[347] that they would all have had the benefit of adopting or endorsing AIG's terms in addition to having the opportunity to consider and assess their own positions having regard to the 2012 Notification. CIMIC's contention that the primary judge erred in so introducing "an additional fact that is outside the s 28 analysis for the co-insurer and the excess insurers" should be rejected for the reasons set out above. 2. The enquiry under s 28(3) is not limited in its ambit to the fact of the disclosure itself. Moreover, CIMIC's own submission is that "the marketing of the insurance risk was undertaken by first agreeing terms with AIG (as the primary lead), then presenting those agreed terms to Chubb … Catlin and Liberty". That factual predicate properly informs the counterfactual for the purpose of the enquiry under s 28(3). Thus, the primary judge did not err in considering whether each of Chubb, Catlin and Liberty "would have entered into the contract, for the same premium and on the same terms and conditions" (as required under s 28(1)) having regard to the fact that each of Chubb, Catlin and Liberty would have been presented with AIG's terms, which would have included the exclusion relating to matters identified in the Iraq File Note. As senior counsel for Catlin submitted orally, there is no reason to exclude from the counterfactual the fact that excess layer insurers will look to what the lead insurer was doing. 3. Mr Ingram's evidence was predicated upon him being informed of the existence and contents of the Iraq File Note in the 2011 renewal process involving Chubb. During Mr Ingram's cross-examination, he said: "Q. To the extent that you are here [at [42] of his affidavit] talking about the contents of the file note, do I understand correctly that that would come to you either through someone else in the organisation providing it to you or summarising its content for your consideration? A. Yes, correct. Q. That's the process you've proceeded on here. Is that right? A. Yes, correct." 1. Mr Ingram thus confirmed that the contents of the Iraq File Note would have been brought to his attention had it been disclosed prior to the inception of the 2011 Primary Policy. Whilst the cross-examiner put to Mr Ingram that his evidence assumed that there was a different underwriting presentation for the purposes of renewal for the 2011 year than had occurred for the 2012 year, and he agreed with that, it was not put to Mr Ingram that the contents of the Iraq File Note would not have come to him in that way. Having regard to Mr Ingram's evidence, it was not necessary for Chubb to call evidence from those below Mr Ingram to establish that they would in fact have given that information to him. 2. In this regard, it is of some significance that Mr Ingram's affidavit evidence was that, for the 2012 year, Craig Jokela, National Directors and Officers Product Head at Chubb, had attended a presentation in April 2012 by Mr Tyrwhitt, then CEO of Leighton. Mr Jokela reported to Mr Ingram that Mr Tyrwhitt had been "very forthcoming and answered every question we had". Chubb had also had a "one on one" meeting with Mr Tyrwhitt in May 2012. Moreover, by the 2012 year, Leighton had already notified the matters relating to the Iraq File Note as a claim for the 2011 year and had also included a fulsome description of those matters in the renewal proposal for the 2012 year. All of those matters may explain why Mr Ingram considered it likely that the contents of the Iraq File Note would have come to his attention in the 2011 year (notwithstanding that the CEO would not, at that time, have been Mr Tyrwhitt) if they had been disclosed to Chubb even though Chubb was not given a copy of the Iraq File Note at any point in the 2012/2013 renewal process. 3. Mr Ingram's evidence was that if he had been informed of the existence and contents of the Iraq File Note he would not have authorised the offer of cover that was in fact made for the 2011 year. In his affidavit he said that the Iraq File Note would have suggested to him a serious risk that Leighton had secured large contracts through the payment of substantial bribes and that "the contents of the [Iraq] File Note would have suggested to [him] a significantly greater risk of claims" than was suggested by the matters in fact disclosed by Leighton to Chubb for the 2011 year. Senior counsel for CIMIC submitted that this evidence disclosed a "massive mismatch between the assumptions that were given or taken by Mr Ingram and the findings of her Honour." However it is clear from Mr Ingram's affidavit that the assumption that he made for the purposes of this evidence was not that the Iraq File Note itself said that there had been bribes. Rather, the assumption that he made was that the existence and contents of the Iraq File Note was disclosed. His interpretation of the Iraq File Note was that its contents suggested a serious risk that contracts had been secured through the payment of substantial bribes. Whilst Mr Ingram characterised the payment which he considered may be a bribe as being in the sum of about $50 to 60 million, and the Iraq File Note states that that was the sum payable for the subcontract as a whole, that does not undermine the probative value of Mr Ingram's evidence. It was the fact of the report of a payment suggesting a serious risk of a substantial bribe that had significance. 4. Catlin relied upon the primary judge's unchallenged finding, at J[359], that Catlin, in its excess policy, would have had the benefit of AIG's exclusion of risk. Catlin's 2011 First Excess Policy was on the Marsh Excess Wording, set out at [97] above. At cl 1.1, Catlin agreed to insure Leighton "on the same terms as the Primary Policy except as specifically set out in this Excess Layer Policy and any attached endorsements." 5. The primary judge's finding as regards Catlin is also supported by the evidence of Mr Powell. His evidence was that if he had been aware, as at 30 June 2011, of what he described as the "Iraq Information", his "clear view" would have been that Catlin should not bear the risk of any "otherwise covered loss that may arise from those known circumstances." Whilst the "Iraq Information" did not precisely reflect the matters identified in the Iraq File Note, the substance of Mr Powell's evidence supports a finding that Catlin would not have entered into the contract for the same premium and on the same terms and conditions if he had been aware of the matters identified in the Iraq File Note. Common sense would dictate that his concerns would have been the same in that circumstance. The primary judge at J[359] did not err in concluding that Catlin would have protected itself if there had been pre-inception disclosure. 6. Liberty's submissions reflected that of Catlin. First, that if AIG had included a relevant exclusion then Liberty would have had the benefit of that. Second, the evidence of Mr Thomas and Mr MacLean, the Liberty underwriters, supports the primary judge's conclusion that Liberty had discharged its burden of proof under s 28(3). Mr MacLean's evidence was that he would have considered that it was appropriate to have a specific matters exclusion if he had been informed of the contents of the Iraq File Note or that Leighton may have been involved in corrupt conduct (such as bribery) or unlawful conduct, by which he meant that it was possible that there had been a payment of a substantial bribe. He would have done so to make it clear that "in the event of any claim or investigation later made in any way connected with the alleged bribery disclosed, there would only exist the possibility for one policy … to be available to the insured … that being the expiring 10/11 Second XS Policy." He would have regarded such a disclosure as a "significant disclosure warranting such an endorsement". 7. Mr Thomas' evidence was that, if either of those matters had been disclosed to him, and if the primary layer insurer had proposed to renew but on the basis of a specific matters exclusion, he would have approved Liberty renewing its policy in June 2011 on wording which contained that exclusion. If he had been told merely that Leighton may have been involved in corrupt conduct such as bribery or unlawful conduct, what would have been important would be that there was enough for Liberty to strongly suspect that there was corrupt conduct and that there was an investigation on foot. Mr Thomas said, further, that he would not have been prepared to approve Liberty entering the 2011 Second Excess Policy without such an exclusion, regardless of whether the primary layer insurer had required it. 8. The primary judge accepted at J[364] both that Liberty would have had the benefit of AIG's primary policy terms, relevantly excluding liability, and that in any event, Liberty had established that it would not have entered into the 2011 Second Excess Policy on the same terms if there had been proper disclosure or no misrepresentation. The evidence summarised above plainly supported the latter conclusion. Conclusion as to Issue 7 1. It follows that grounds 2, 6 and 8 of CIMIC's notice of cross-appeal in the Berkley Appeal should be rejected. Issue 8: Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful? 1. This issue arises from the NOCs of each of AIG, Catlin, Chubb and Liberty relating to CIMIC's cross-appeal in the Berkley Appeal. Specifically, in grounds 1-9 of its NOC, AIG contends that the primary judge erred in not making a number of additional factual findings. By ground 10, AIG contends that those matters should have led to the primary judge making additional findings as to breach of Leighton's duty of disclosure under s 21(1)(b) of the Insurance Contracts Act and of misrepresentation by Leighton to the 2011 Insurers. Those grounds are adopted and repeated by each of Chubb, Catlin and Liberty. 2. Having regard to our findings above, the 2011 Insurers have succeeded in establishing that the primary judge did not err in finding that their liability was reduced to nil under s 28(3) as regards losses related to the matters identified in the Iraq File Note. The additional finding which is the subject of Issue 8 was only sought by the 2011 Insurers against the possibility that we would accept CIMIC's argument that the matters found by the primary judge were not sufficient to engage a duty of disclosure. That possibility has not arisen. However, we nonetheless have dealt with Issue 8: Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 at [12] (Gleeson CJ, Gummow, Kirby and Hayne JJ), discussed by Kiefel CJ, Gageler and Keane JJ in Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [8]. 3. As is apparent from the framing of Issue 8, the question raised is whether the primary judge should have found an additional breach by CIMIC of its duty of disclosure under s 21 of the Insurance Contracts Act as, from the date of the Iraq File Note, it knew the facts recorded in the Iraq File Note and knew and/or reasonably believed, but did not disclose, that the payments recorded in the Iraq File Note were or may be unlawful. A number of sub-issues have been identified by the parties, raising findings that the primary judge ought to have made or errors purportedly made by the primary judge. In the discussion below, we consider these matters and, in places, find that in some respects the primary judge erred. Ultimately, however, these errors have significance only to the extent they go to the ultimate issue raised by Issue 8. It was not contended, and we have not found, that findings on any of the sub-issues have significance other than to whether the additional breach of s 21 identified in Issue 8 itself should have been found against CIMIC. 4. We have set out our approach to fact-finding on appeal at [28]-[30] above. It was not suggested that the parties had not put all available relevant evidence going to Issue 8 in the appeal books. Further, in the voluminous written submissions, and in the lengthy oral submissions, the parties highlighted those documents which went to Issue 8. To the extent that the sub-issues arising under Issue 8 depend wholly on an assessment of the documentary evidence, this Court is in as good a position as the primary judge to determine what inferences should be drawn from that material. To the limited extent that the matters raised under Issue 8 also require assessment of the oral evidence of Mr Stewart, we are conscious that the trial judge had an advantage having observed Mr Stewart give evidence. We have borne that in mind in considering what inferences should be drawn from that evidence. 5. We have also given full weight to the gravity of the matters alleged by the 2011 Insurers, in particular that there was impropriety or corrupt payments. The proper approach to fact finding, in that circumstance, is described by the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 at 170-171 (Mason CJ, Brennan, Deane and Gaudron JJ) ("Neat Holdings"): "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." (Footnotes omitted.) 1. That description helpfully elaborates one aspect of the exercise set out in s 140 of the Evidence Act: Jennings v Wilden [2023] NSWCA 41 at [7] (Basten AJA, Meagher and Mitchelmore JJA agreeing). 2. We have also borne in mind that neither Unaoil, nor Mr Oday, were involved in these proceedings. In these circumstances, we are conscious that we have not had the benefit of their perspective on the matters which were reported by Mr Savage to Mr Stewart, and recorded in the Iraq File Note. Nor do we have the benefit of evidence from Mr Savage. 3. Before turning to the individual sub-issues in Issue 8, it is convenient to address AIG's key contention that the primary judge should have, but did not, consider the evidence as a whole when making factual findings. Significantly, AIG contends, the primary judge failed to have regard to the Iraq File Note itself when making findings as to the truth or otherwise of the representations contained therein and when making findings more generally as to what occurred between Leighton and Unaoil in the period leading up to and shortly after the creation of Iraq File Note. 4. As Gibbs CJ and Mason J recognised in Chamberlain v The Queen (No 2) (1984) 153 CLR 521 at 535-536; [1984] HCA 7, evidence may have a cumulative effect such that it is necessary to consider all the facts together when making findings. Evidence as to one particular fact may have to be considered in the light of the whole of the evidence. This approach was applied in the context of civil fact finding in Australian Broadcasting Corporation v Wing (2019) 271 FCR 632; [2019] FCAFC 125 at [134]. The Court there cautioned against "compartmentalising circumstantial facts, rather than standing back and assessing the broader picture." 5. We agree with AIG's contention that the primary judge approached her fact finding task by compartmentalising the Iraq File Note on the one hand, and the factual background to it on the other, rather than assessing the evidence as a whole. That is apparent from the structure of her Honour's reasons. Between J[192] and [235] the primary judge considered the emails and other documentary evidence relating to the Iraq Phase 1 and Phase 3 Projects and establishing the relationship between Unaoil and Leighton. At J[236] the primary judge correctly directed herself by reference to Neat Holdings at 171, Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and s 140(2) of the Evidence Act. Then at J[237] her Honour accepted CIMIC's submission that there was insufficient evidence to conclude that the Unaoil MOUs and MOAs involved corrupt payments so Leighton could "win" the Iraq Phase 1 and later Iraq Phase 3 Contracts. The primary judge made no reference to the Iraq File Note in reaching this finding. At J[242]-[249] the primary judge found that "the May 2010 increase in Leighton's original tender price" had not been "demonstrated to directly relate to hiding improper payments" and explained the reasons for making that finding. Again, the primary judge made no reference to the Iraq File Note in reaching this finding. 6. At J[250] the primary judge reached the ultimate finding that her Honour was not "persuaded to a requisite standard on the material that any person at Leighton Offshore agreed to pay Unaoil additional money to be used improperly so Leighton could win the Iraq work." The primary judge explained her Honour's reasons for this finding at J[250]-[252]. The primary judge again makes no reference to the Iraq File Note in that explanation. 7. After making the findings, as set out above, the primary judge at J[253] said: "However, that still leaves the fact that Mr Savage informed Mr Stewart of the allegations recorded in the Iraq File Note, which Mr Stewart understood as involving "illegitimate, illegal and improper payments", as detailed below. It is, therefore, important to consider Mr Savage's knowledge when considering Mr Stewart's understanding of the Iraq File Note." 1. Whilst the primary judge here refers to the Iraq File Note, her Honour does not do so for the purpose of weighing it in the balance when reaching findings of fact as to the circumstances relating to the Iraq Phase 1 Contract, and the proposed extension or variation thereto, that led to and followed shortly after the Iraq File Note was created. Rather, the primary judge's reference to the Iraq File Note here is merely by way of introduction to the next issue for consideration, namely Mr Savage's knowledge as to the matters recorded therein. In then making findings as to Mr Savage's knowledge, the primary judge gave only limited consideration to the background circumstances as apparent from the emails and other documentary evidence summarised at [33]-[93] above. At J[263] the primary judge made findings that: "On 23 November 2010, Mr Savage was aware from Mr Waugh that he was negotiating with the Ministry of Oil for an extension of the Phase 1 Contract (rather than requiring a bid for that Phase 3 work) at a value of about US$500 million, which was consistent with the Iraq File Note. Shortly thereafter, on 10 December 2010, Leighton signed a Phase 3 MOU with Unaoil with a price (at that stage) of US$75 million and liquidated damages of US$40 million, which was also consistent with the figures in the Iraq File Note." 1. Her Honour found, at J[264], that those facts did not necessarily mean that Mr Savage understood that improper payments had been, or would be, paid by Leighton: "…rather than understanding that the close connections Unaoil had with Mr Oday and persons working in the Ministry could provide Leighton with useful information about the tender process and assist Leighton's prospects of securing the Iraq Contracts ahead of its only competitor, Saipem." 1. Her Honour concluded, at J[266], that it was not demonstrated that Mr Savage accepted that the payments were as Mr Stewart believed. This assessment was made largely without reference to the emails and background documentation that the primary judge had regard to in her Honour's separate, compartmentalised, analysis of whether corrupt payments had been made. 2. We are thus satisfied that the primary judge erred in her approach to the evidence when making these key findings of fact. Whether her Honour reached erroneous conclusions is considered below. 3. It is convenient also to deal at the outset of our consideration of Issue 8 with AIG's contention (at sub-issue 8(c)) that the primary judge erred in relying upon the transcript of Mr Savage's ASIC compulsory examination when considering whether or not to draw a Jones v Dunkel inference. As it was common ground before us that the transcript was only admitted for a limited purpose, it should not have been used for the purpose of drawing any inferences. However, as AIG do not appeal against the failure of the primary judge to draw a Jones v Dunkel inference, this error did not materially affect the primary judge's conclusions. We would reject AIG's further submission that the primary judge's reliance upon the transcript of Mr Savage's ASIC compulsory examination for the purpose of considering the Jones v Dunkel submission, at J[262], infected her Honour's conclusion, at J[264], that it had not been proved that Mr Savage understood that improper payments had been, or would be, paid by Leighton. There is nothing to indicate that her Honour had regard to the transcript beyond the discrete issue whether to draw a Jones v Dunkel inference. 4. In the Agreed List of Issues, Issue 8 comprises eight sub-issues, set out at [25] above. We have dealt with sub-issue 8(c) already. Sub-issues 8(e), (f), (g) and (h) are best understood as components of sub-issue 8(b), namely whether the primary judge erred in concluding that there was insufficient evidence of "corrupt payments to win the Iraq work", and we will deal with them in that way. We shall first address sub-issue 8(a). Should the primary judge have found that the representations recorded in the Iraq File Note were true? 1. As to sub-issue 8(a), the 2011 Insurers contend that the primary judge should have found that the representations recorded in the Iraq File Note were true and that Leighton, through Mr Savage, knew this by 23 November 2010 at the latest. The 2011 Insurers, in essence, make three primary submissions. 2. First, they contend that the primary judge erred in failing to direct herself that, once the Iraq File Note was admitted into evidence as a business record, CIMIC bore an evidentiary burden to adduce evidence to the contrary. The 2011 Insurers rely upon Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 at [72]-[75] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) and at [206] (Heydon J) ("Hellicar"). 3. This submission overstates what the High Court held in Hellicar. As CIMIC submits, in the passages relied upon, the majority and Heydon J were considering the significance of minutes of a board meeting, which had subsequently been approved by the board as a correct record. Further, the statement in the majority judgment at [73], that the ultimate issue in the trial was not whether the minutes were an accurate record of what had occurred, was made in the context of the respondent's submission in that case as to the significance of inaccuracies in the minutes. The majority should not be taken to have held that it is never incumbent upon a party tendering a business record to prove that the representations set out therein are accurate. 4. Similarly, neither the majority nor Heydon J should be understood as holding that there is, in every case, an evidentiary burden upon a party who wishes to contend that matters recorded in a business record are inaccurate or false. Each case will depend upon its own facts. In some cases, once a business record is admitted into evidence, a provisional or tactical burden will effectively rest upon a party disputing its accuracy. Having regard to the seriousness of the matters identified in the Iraq File Note and the circumstances more generally, this is not such a case. 5. Second, the 2011 Insurers contend that the primary judge did not make findings as to whether the representations in the Iraq File Note were true. We agree. That is most starkly apparent from the primary judge's reasons at J[243], in the context of considering whether or not Leighton overpaid Unaoil for onshore works for the Iraq Phase 1 Project. The primary judge rejected the contention that Leighton had overpaid Unaoil and did so without any reference to the representations in the Iraq File Note. Given that the representations in the Iraq File Note were relevant to this question, they should have been taken into account by the primary judge in making findings as to whether Leighton had overpaid Unaoil. The representations in the Iraq File Note were also relevant (but of course not determinative) evidence on the question whether corrupt payments were made. 6. Third, the 2011 Insurers contend that the primary judge should have found that the representations in the Iraq File Note as to what had occurred in order to win the Iraq Phase 1 Contract, and what was proposed in order to win an extension or variation thereto, were true. Mr Stewart's evidence was that the Iraq File Note was made by him during and shortly after the in-person conversation that he had with Mr Savage on 23 November 2010, and shortly after the subsequent telephone call with Mr Savage the same day: at J[56]. Whilst CIMIC sought to meet the 2011 Insurers' submission by reference to the fact that the Iraq File Note was not a verbatim record, or a transcript, that does not cast doubt upon the reliability of what it records in circumstances where it was contemporaneous and found to be an accurate record of Mr Stewart's understanding of the conversation. 7. The primary judge rejected the contention that the matters set out in the Iraq File Note were incredible or impossible: see at J[289], [303]-[318]. The primary judge also rejected CIMIC's contention that Mr Stewart had real concerns that Mr Savage was seeking to compromise him in reporting the matters set out in the Iraq File Note: at J[310]. In making that finding, the primary judge relied, in part, upon the fact that Mr Stewart asked Mr Sasse to keep his conversation with Mr Savage in mind in his own investigation of matters in relation to a separate project of Leighton in Singapore: at J[308]. Contrary to CIMIC's submission, having regard to these findings of the primary judge with which we agree, the fact that Mr Wild suggested to Mr Stewart that Mr Savage was trying to set him up does not undermine the reliability of the Iraq File Note as a record of what Mr Savage told Mr Stewart on 23 November 2010. Nor is the accuracy of the Iraq File Note undermined by Mr Wild's observation that in late 2010 Mr Savage and Mr Stewart had, to that point, had a "toxic and adversarial professional relationship". 8. Given the primary judge's correct rejection of Mr Stewart's evidence that he had concerns that Mr Savage may have been trying to set him up, there is no reason to doubt that the words that Mr Stewart used accurately reflected what Mr Savage was telling him, including as regards the information that the Iraq Phase 1 Contract was won by the payment of money to a subcontractor when the real value of the work was less than 50% of the amount paid. 9. As the 2011 Insurers submit, save as regards the discrete issue whether Mr King had been aware of the overpayment of the subcontractor for the Iraq Phase 1 Project, there was no evidence before the Court that contradicted, or cast doubt upon the truth of, the representations set out in the Iraq File Note. As to that one matter, it is readily explicable why Mr Savage may have embellished that detail. He may have done so as part of his bid to persuade Mr Stewart, as CEO-designate, to authorise the proposed payment to the subcontractor for the purposes of winning the extension of, or variation to, the Iraq Phase 1 Contract. As the primary judge found, at J[291], that was the purpose of his meeting with Mr Stewart in the first place. That embellishment is not such to cast doubt upon the truth of other matters set out in the Iraq File Note. Further, save as regards the account of Mr King's knowledge, the evidence does not disclose any good reason to doubt that Mr Savage was communicating to Mr Stewart what he believed to be an accurate account of what had happened, and what was proposed. Indeed, the context for the meeting would suggest that Mr Savage had every reason accurately to convey these matters to Mr Stewart when seeking his approval to proceed with the proposed payment. 10. We add that the inconsistency between Mr Stewart's understanding of the term "N.S.C", and the absence of any evidence that Unaoil was in fact nominated by SOC (discussed above at [149]), does not cast any doubt upon the truth of the matters set out in the Iraq File Note. As set out above, "N.S.C" is not a term that has any defined meaning. 11. CIMIC submitted that when that expression was used by Mr Waugh in his email to Mr Savage of 26 May 2010 it was presumably referring to Unaoil as a subcontractor nominated, or put forward, by Leighton. We would not reach any conclusion as to how Mr Waugh understood the term. It may be that, as Catlin submitted, Unaoil was one of the SOC approved subcontractors identified in the Iraq Phase 1 Contract, however the emails between Mr Waugh and Mr Oday on 13 October 2010 suggest that as at that date, the approval of Unaoil as a subcontractor was outstanding. The Iraq File Note records Mr Stewart telling Mr Savage "[he] fully [understood] the concept & the fact that we have been introduced to this "N.S.C" by the client". There is no suggestion that Mr Savage corrected Mr Stewart's understanding in this regard. In these circumstances, it may be inferred that Mr Savage understood that the term "N.S.C" referred to a subcontractor who was introduced to Leighton by SOC. Whilst it is clear that Mr Waugh met with Mr Willimont from Unaoil on 7 April 2010 and Mr Willimont wanted to know if Leighton would be interested in a package for onshore works, the evidence is silent as to how that meeting was arranged. Contrary to CIMIC's submission, it is not "plain" that Unaoil approached Leighton without any introduction by SOC. Rather, it is not possible to make any finding as to this. In those circumstances, neither the description of Unaoil as an "N.S.C", nor Mr Stewart's indication to Mr Savage that he understood Unaoil to have been introduced to Leighton by SOC, casts doubt upon the accuracy of the matters identified in the Iraq File Note. 12. There is also evidence that provides objective verification, or support, for the truth of representations of substance identified in the Iraq File Note, namely: 1. Leighton had a contract of US$733 million (close to the $720 million amount referred to in the Iraq File Note) for the Iraq Phase 1 Project; 2. the subcontract with Unaoil had been negotiated by Mr Waugh; 3. the Supplementary Agreement dated 8 September 2010, amending the MOA dated 26 June 2010 between Leighton and Unaoil, for the Iraq Phase 1 Project agreed an "all inclusive" price of US$78.5 million; 4. that was a little less than twice the sum of the US$42.5 million amount that Leighton had documented as its estimated cost for the original scope of onshore works for the Iraq Phase 1 Project and if the additional US$15 million, later $10 million (discussed below), is added this is little more than twice the original estimated cost. These figures, albeit not precisely reflecting those in the Iraq File Note, are broadly similar to those suggested by Mr Savage as recorded in that note; 5. Mr Waugh sent an email to Mr Willimont to discuss the Iraq Phase 3 Contract bid on the day that it was announced; 6. by email of 21 November 2010, Mr Waugh told Mr Savage that he had a call the previous day to "fly to Baghdad and meet the Minister of Oil … This is a key part of the process of getting JICA [Iraq Phase 3 Project] into Phase 1." The meeting was arranged for the 23 November 2010. Mr Oday was involved in arranging that meeting; 7. whilst the subcontract price proposed by Unaoil to Leighton in the MOA sent on 27 November 2010 was US$75 million, there is no evidence that Mr Waugh or Mr Savage knew as at 27 November 2010 that that would be the final price agreed. Given that the price was reduced to US$55 million in April 2011 there is some objective support for Mr Savage to have proposed US$50 to 60 million as the expected price to be paid to Unaoil; 8. the emails on 30 November 2010, in which Mr Waugh says he will tell Unaoil and Mr Oday that HLG was meeting with Iraqi officials through another "agent", suggest that some arrangements or communications between Mr Oday, Unaoil and Mr Waugh remained extant at that time; and 9. the proposed extension/variation of the Iraq Phase 1 Contract had a value of approximately US$500 million. 1. Having regard to this evidence, to the representations set out in the Iraq File Note and to the purpose of Mr Savage speaking to Mr Stewart on 23 November 2010, we are satisfied on the balance of probabilities that (other than as to Mr King's knowledge of any those matters and as to "N.S.C" having any particular meaning) the representations in the Iraq File Note are true. The evidence gives rise to a reasonable and definite inference that those matters are true and goes beyond conflicting inferences of equal degrees of probability: Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 ("Bradshaw v McEwans") as adopted in Luxton v Vines (1952) 85 CLR 352 at 358; [1952] HCA 19 (Dixon, Fullagar, Kitto JJ). In particular, we are satisfied that the representations as to the following matters are true (in this part of the judgment, dealing with the evidentiary significance of the representations in the Iraq File Note, we refer to "representations" rather than to the matters identified in the Iraq File Note): 1. Mr Savage considered that negotiation of an extension/variation to the Iraq Phase 1 Contract required a payment to Unaoil which would do all onshore works; 2. Mr Savage considered that this required a payment to Unaoil of US$50 to 60 million in circumstances where the real value of the work that it was proposed Unaoil would perform was about half of that sum; and 3. the Iraq Phase 1 Contract was won by a payment to Unaoil but Mr Savage considered that the real value of the work that Unaoil was to perform was about half what was paid. 1. As the person making the representations, we would also infer that Mr Savage, and through him Leighton, knew that these representations were true by at least 23 November 2010. 2. The primary judge should have found that the representations in the Iraq File Note were true and that Leighton knew this. Grounds 1 and 2 of AIG's NOC should be upheld. Did the primary judge err in concluding that there was insufficient evidence of "corrupt payments to win the Iraq work"? 1. In sub-issue 8(b), the 2011 Insurers challenge the primary judge's findings, at J[237] and [250], that there was insufficient evidence to establish that the MOUs and MOAs between Leighton and Unaoil involved corrupt payments so that Leighton could win the Iraq Phase 1 Contract or that any person at Leighton agreed to pay Unaoil additional money to be used improperly so Leighton could win that contract. The 2011 Insurers contend that if the Iraq File Note itself had been taken into account, as we have already found it ought to have been, then her Honour ought to have been satisfied of those matters. 2. Before addressing the evidence going to this sub-issue, it is necessary to identify an important distinction between payments to Unaoil for assistance in winning the Iraq Phase 1 Contract on the one hand, and corrupt payments on the other. Whilst the former may well involve, and could suggest, the latter, it is not the case that payments for assistance will necessarily be corrupt payments. This is because the provision of assistance in winning a contract such as the Iraq Phase 1 Contract may potentially have involved legitimate engagement through lobbying or political or commercial influence, including through Mr Oday. On the evidence before us, we are not in a position to determine what the assistance to be provided, or provided, by Unaoil entailed, beyond the involvement of Mr Oday. 3. Thus, below we consider first whether payments were made for Unaoil to provide assistance to Leighton to secure the Iraq Phase 1 Contract, and then go on to consider whether those payments were corrupt payments. 4. Consistent with our finding as to the truth of representations in the Iraq File Note, our consideration must start from the premise that the Leighton COO with responsibility for the Iraq Phase 1 Project considered that the Iraq Phase 1 Contract was won by a payment to Unaoil at roughly twice the real value of the work to be performed, and that the extension/variation would require a payment of a similar character. The question then arises as to what inference we should draw from this, having regard to the evidence as a whole. We have approached this question mindful of the seriousness of the findings sought and that neither Unaoil nor Mr Oday, nor Mr Savage, took any part in these proceedings and on the basis, as set out above, that proof to the civil standard requires evidence giving rise to a reasonable and definite inference going beyond inferences of equal degrees of probability: Bradshaw v McEwans. 5. Before turning to the matters relied upon by the 2011 Insurers, it is convenient to deal with the primary judge's conclusion at J[237], challenged by the 2011 Insurers, that the MOUs and MOAs between Leighton and Unaoil provided Leighton with specific, commercially justifiable advantages. The first matter identified by the primary judge at J[237(1)] was that the Unaoil subcontract meant that no Leighton employees were put at risk even though the cost was more than if "Leighton Offshore had done the work itself". Here it appears that the primary judge has assumed that Leighton would not otherwise have subcontracted the onshore works for the Iraq Phase 1 Project. However, it is clear from the Bid Review Notes attached to Mr Eley's email of 4 March 2010 that Leighton was proposing to use local contractors for onshore works and security in Iraq. Consistent with this, the green sheet dated 29 March 2010, related to Leighton's first bid for the Iraq Phase 1 Project included significant sums both for subcontractors and for agency and security support services. 6. The proposed use of local subcontractors is also apparent from Mr Eley's email of 20 May 2010. In this context, the reference to Leighton "doing it ourselves" in the 7 April 2010 email should be read as referring to Leighton arranging local subcontractors and not as referring to Leighton employees carrying out all onshore works themselves. It is thus apparent that Leighton's proposal was at all material times to use subcontractors for onshore works (albeit with some supervision) and local security services. The primary judge erred in assuming that, had Unaoil not been appointed, Leighton would not have subcontracted the onshore works. That factual premise for this "commercial advantage" as found by the primary judge was thus erroneous. 7. The second advantage which the primary judge identified at J[237(1)] was that Unaoil provided additional "major components" which had not been included in Leighton's $42.5 million cost estimate for the onshore works arrived at by Mr Eley on 21 May 2010 (set out at [44] above). In particular, based upon Mr Eley's 21 May 2010 email, the primary judge found that the Unaoil subcontract offered substantially more accommodation for personnel, "landfall shore-pull", "IT equipment and facilities" and onshore and offshore security. It is clear, however, that Mr Eley's price of US$42.5 million included both onshore and offshore security. Further, it is not clear that the additional matters offered by Unaoil were properly characterised as "commercial advantages", given that Mr Eley suggested that Unaoil should be asked to remove those elements from their scope. It is also of some significance that there is nothing in the many documents in evidence that suggests that any of Mr Eley, Mr Waugh or Mr Savage considered that the reason to subcontract to Unaoil, and to pay Unaoil significantly more than Leighton had budgeted, was to avoid the administrative and practical difficulties of Leighton managing subcontractors. 8. Whether the Unaoil onshore services bid conferred commercial advantages was not the subject of witness evidence and we consider that it is difficult to draw reliable inferences as to this. Overall, we consider that the fact that Unaoil offered a package including the provision of all subcontracting and security, rather than requiring that Leighton arrange for potentially multiple local subcontractors, could be regarded as a commercial advantage but that it had to be set against the risk, identified by Mr Eley in his email of 21 May 2010, of locking in a price at that time. 9. Ultimately, the only direct evidence addressing commercial advantages is that of Mr Eley in his email of 21 May 2010 that Unaoil's price would have to come in at around $40 million for it to be worth Leighton's while locking in a price at that time. Mr Eley reported to Mr Waugh and Mr Savage and was involved in preparing the Iraq tender documentation. We infer that he would have had practical knowledge of the commerciality of the subcontracting arrangements. We do not infer that there were commercial advantages justifying the increased sums to be paid to Unaoil. Moreover, the Iraq File Note itself stands strongly against this conclusion. Had Mr Savage considered that such advantages commercially justified the payment, we doubt that he would have expressed himself as recorded by Mr Stewart. Contrary to CIMIC's submission, we are satisfied that we can reliably draw that inference from the language used by Mr Stewart in the Iraq File Note. 10. The third commercially justifiable advantage identified by the primary judge at J[237(2)] was that Unaoil had previously been the contractor for another international tenderer who had withdrawn their bid and therefore Unaoil appeared to be an appropriate subcontractor for the works. With respect to the primary judge, we do not see how this supports the sums agreed to be paid. 11. The fourth commercially justifiable advantage, identified at J[237(3)], was that Unaoil would provide connections for Leighton, which was entering a new country. The evidence does suggest that Unaoil had connections with the Iraqi government, and we would infer that that was likely to have been regarded as commercially advantageous to Leighton in ways other than in providing assistance to Leighton Offshore in winning the Iraq Phase 1 Contract. There is nothing to suggest, however, that those advantages justified an agreement to pay a sum a contract sum of some US$20 million more than Leighton Offshore had budgeted, together with liquidated damages of initially US$15 million and later US$26.5 million. 12. The fifth commercially justifiable advantage relied upon by the primary judge at J[237(4)] appears to be that Unaoil agreed to provide the services in art 9 of the MOUs and MOAs. Those services were premised upon the subcontract not being awarded to Unaoil. Thus, they could not provide any commercial justification for the subcontract price agreed with Unaoil. The email of 13 June 2010 from Mr Eley to Mr Waugh asking whether Leighton could just pay Unaoil $15 million for those "assistance" services might suggest that he understood that the liquidated damages was, in reality, a form of payment for such services, but it is significant that the MOU was not structured in that way. Thus, we would infer, the amount to be paid by way of liquidated damages was not payment for such services. Nor is there any evidence before us that supports a conclusion that services to be provided after the award of the Iraq Phase 1 Contract to Leighton would have that sort of value to Leighton. 13. We are thus satisfied that there were some, limited, commercially justifiable advantages conferred on Leighton by the Unaoil subcontract but are not satisfied that those advantages justified the amounts which Leighton agreed to pay to Unaoil in the MOUs and MOAs. 14. We propose now to set out our findings as regards the matters which the 2011 Insurers contend, together with the representations in the Iraq File Note, support the ultimate conclusion sought in Issue 8. Our findings must be read together with the summary of the emails and other documentary evidence. The 2011 Insurers rely upon that evidence whereas CIMIC contends that this evidence falls short of supporting the inferences for which the 2011 Insurers contend. As set out above, ultimately the significance of our analysis is as to whether the additional breach of s 21 of the Insurance Contracts Act contended for in Issue 8 should have been found. The Iraq File Note as a whole 1. The representations set out in the Iraq File Note, as a whole, support an inference that there may have been some impropriety associated with the payment and proposed payment to Unaoil for the Iraq Phase 1 and Phase 3 Projects. That could explain why Mr Savage said words to the effect that Mr Stewart should not talk to Mr King about the matter. That there may have been impropriety could also be inferred from the fact that Mr Savage is not recorded as saying anything to reassure Mr Stewart when he said words to the effect that this was what got the AWB "into trouble", and that he was not comfortable with the payment. Mr Oday's role and relationship with Unaoil 1. As is clear from the summary of evidence set out above, Mr Oday's team was known by Unaoil to be jointly responsible for evaluation of the tender bids for the Iraq Phase 1 Project. Mr Al Jarah apparently considered him useful in that capacity. That could suggest that Unaoil thought that Mr Oday would or could be persuaded to act in Unaoil's interest in the process of evaluating bids. The response of Mr Akle to Mr Al Jarah's email of 19 May 2008 suggests that he anticipated that Mr Oday could help on "the SPM project", which would be inferred to be a reference to the Iraq Phase 1 Project as it involved new "SPM terminals." 2. An inference that Unaoil was paying Mr Oday to act in their interest in relation to the Iraq Phase 1 Project, and that he would receive some proportion of a sum paid to Unaoil, could be drawn from the subsequent email exchange, on 17 and 18 May 2009, in which Mr Al Jarah identified that Unaoil had agreed to pay a monthly retainer to Mr Oday and that this was thought by Mr Al Jarah to be something that would go on "as far as we get commitments firmed up and he knows his portion … if he leaves this position it stops". The reference to commitments "firmed up" could be a reference to the Iraq Phase 1 Project given what Unaoil knew of Mr Oday's involvement in bid evaluation for this project. It also appears that Mr Al Jarah paid for Mr Oday's hotel in London. Interactions between Unaoil and Mr Waugh 1. In the email to Mr Waugh on 12 April 2010, Mr Willimont refers to Unaoil's "proposal to assist with the award of the contract" which Mr Willimont had suggested could make a significant difference to Leighton's chance of "winning and successfully executing" the Iraq Phase 1 Contract, highlighting Unaoil's understanding of "all the approval routes and payment idiosyncrasies of this territory" and "intimate knowledge of the SOC – Government approval processes relating to this project." This proposal is something separate from "the onshore quote". Further, the emails of 25 April 2010 suggest that Mr Waugh reconsidered his initial decision not to accept Unaoil's offer to provide assistance with the "award of the contract" and considered that Unaoil could "add value" in that regard. 2. In the context of the evidence as a whole, we infer that the instructions that Mr Waugh sent to Mr Eley shortly after his meeting with Mr Willimont on 26 May 2010, increasing the bid price to around US$690 million, were changes consequent upon that meeting. Up until then Leighton was proposing a reduced bid of US$623,650,000 for the Iraq Phase 1 Project. This was approved by Mr Savage on 23 May 2010, but he wanted to know when Mr Waugh met with "our friends", which was plainly a reference to Unaoil. Mr Waugh's response on 25 May 2010 strongly suggests that his meeting with "the guy", which we infer to be Mr Willimont, may well impact Leighton's bid. That explains why he said that the timing of his meeting with "the guy" was "ok now" because the deadline for the bid had been changed. 3. Mr Savage approved the changes to the bid price following Mr Waugh's meeting with Mr Willimont, including an increase of US$20 million to be paid for Unaoil's subcontracting package, an additional US$30 million "margin", a further million for assorted items and an additional US$15 million which Mr Waugh had told Mr Eley was for "third party vessel for heavy lift" but which Mr Waugh explained to Mr Savage was for "subcon ork", the meaning of which was not explained in the evidence. 4. We would reject CIMIC's contention that it was possible that there were other explanations for the material changes proposed by Mr Waugh on 26 May 2010. There is no evidence explaining why a third party vessel for heavy lift was costed on that day, nor why additional margin was then introduced. Nor is there evidence explaining why Leighton agreed to Unaoil's price when, on 21 May 2010, Mr Eley said that Unaoil would have to offer a price of around US$40 million for it to be worth Leighton's while. 5. Mr Al Jarah's reference, in his email of 28 May 2010 to Mr Waugh, to Unaoil's "Iraqi Principle [sic]" instructing Mr Willimont to stay in Perth to close the MOU could suggest that, to Mr Waugh's knowledge, Unaoil was acting on behalf of a third party Iraqi principal and that the third party Iraqi principal had an interest in the MOU being agreed. Mr Willimont's email, of the same date, indicating that he needed to report back to all involved and that the MOU may be hard to explain to "the family", in context, could also support that inference. Given that Mr Willimont highlighted the importance of the liquidated damages provision in that email, that could suggest that the third party Iraqi principal had a specific interest in the liquidated damages provision. The internal emails within Unaoil on 29 and 30 May 2010 could also suggest that there was some arrangement between Unaoil and Mr Oday, with both having an interest in, and working towards, Leighton signing the MOU and engaging Unaoil. They also suggest that Leighton Offshore agreed to pay Unaoil for assistance in winning the Iraq Phase 1 Contract. 6. That likely explains why Mr Al Jarah reported that Mr Waugh was concerned about getting "enough help at the Ministry" and wanted assurance that Unaoil (and possibly also Mr Oday) "carry enough clout". Similarly, that likely explains why Mr Oday and Unaoil were seeking to persuade Mr Waugh that he needed Unaoil's assistance to win that contract even though it appeared that Leighton Offshore was in any event likely to win the contract. The email from Mr Willimont reporting on his discussion with Mr Waugh on 30 May 2010 indicates that Unaoil's agreement to support Leighton Offshore's position was predicated upon the MOU being signed. The significance of the MOU as a precondition to Unaoil supporting Leighton Offshore to win the Iraq Phase 1 Contract is apparent from the email from Mr Willimont to Mr Waugh on 4 June 2010 in which Mr Willimont says as much. Subsequent communications involving Mr Oday, Unaoil and Mr Waugh 1. The email of 27 July 2010 from Mr Waugh to Mr Savage also supports an inference that Mr Oday was taking steps to advance Leighton's interests not long before the Iraq Phase 1 Contract was awarded and Mr Savage was aware of this. The email of 2 September 2010 further supports an inference that Mr Waugh was communicating to SOC, or those involved in the decision to award the Iraq Phase 1 Contract, through Mr Willimont. This in turn suggests that Unaoil was providing assistance to Leighton to win the contract. Whilst the emails of 7 and 8 September 2010 cast some doubt upon whether Unaoil was genuinely assisting Leighton, they make it clear that both Unaoil and Mr Oday were giving Mr Waugh the impression that they were providing such assistance. Contrary to CIMIC's submission, in those circumstances the fact that there is evidence to suggest that Leighton Offshore's price was lower than that of Saipem does not militate against a finding that Leighton paid Unaoil money to assist it to win the Iraq Phase 1 Contract. 2. The emails in September 2010 also suggest that there had been other, direct, communications between Mr Waugh and Mr Oday and that Mr Oday may himself have been trying to manipulate Mr Waugh for his own gain. The potential that corrupt payments might be made is apparent from Mr Willimont's suggestion that it would be beneficial to Unaoil to pay "a dose of George Washington" to Mr Oday as they needed his assistance for the Iraq Phase 2 Project. (We understand the expression "George Washington" to refer to US banknotes.) The emails between Mr Waugh and Mr Willimont, and between Mr Savage and Mr Waugh in November 2010, support an inference of ongoing liaison between Mr Waugh, Unaoil and Mr Oday which the timing would suggest related to the Iraq Phase 3 Project. It is difficult otherwise to see why Unaoil may have been "upset" to discover that HLG was meeting Iraqi officials through another "agent" and why Mr Waugh would have wanted to let both Unaoil and Mr Oday know about this. The MOAs and the liquidated damages provisions 1. As set out above, the terms of the first MOU between Leighton and Unaoil, dated 31 May 2010 but likely agreed in mid-June, include both a contract sum of US$65 million and a liquidated damages provision providing for payment of US$15 million to Unaoil if Leighton was awarded the Iraq Phase 1 Contract but Unaoil was not chosen to provide the subcontracting package. The terms of art 2.12, set out above, suggest that Unaoil was agreeing to assist Leighton in winning the Iraq Phase 1 Contract. The figure for liquidated damages is nearly 25% of the contract sum. In this regard, we note that in the email of 4 June 2010 Mr Waugh says that he had explained the liquidated damages sum to his boss, who we infer is Mr Savage, on the basis that Unaoil "would want to cover 12" and Mr Waugh "gave [himself] a bit of a buffer". This could suggest that Mr Waugh, and through him Mr Savage, knew that Unaoil would be substantially out of pocket if Leighton won the Iraq Phase 1 Contract, on account of it having provided services to assist Leighton winning the Iraq Phase 1 Contract. That could, in turn, suggest an awareness that Unaoil was obliged to make a payment to a third party in that eventuality, although as set out below, we have not drawn that inference. 2. The subsequent increases to the amount of liquidated damages to US$25.5 million and then to US$26.5 million (in the context of the Unaoil's subcontract price increasing to US$77.5 million and later to US$78.5 million), without any change made to the services to be provided by Unaoil under art 9 in those subsequent MOUs, supports our conclusion that the liquidated damages were not consideration for the services in art 9 of the MOUs. The US$15 million for the "heavy lift" vessel added on 26 May 2010 1. There is also the matter of the US$15 million added into direct costs in the green sheet for the Iraq Phase 1 Project as "provision for third party vessel for heavy lift", in accordance with Mr Waugh's email to Mr Savage shortly after his conversation with Mr Willimont on 26 May 2010. There are various emails which raise doubts as to whether this sum was genuinely in respect of a heavy lift vessel. In particular, if this were such a cost it is difficult to understand why Mr Savage asked Mr Waugh on 5 July 2010 to tell him in which "section" of the green sheet the "USD 15m" was located. The reference to "the USD 15m" suggests that this was an amount that was identifiable by reference to its sum, and not by reference to the item for which it was a costing. Further, Mr Savage's email to Mr Voyer on the same day refers to "the USD15m fee we agreed with our friends". That suggests this was not the cost of a heavy lift vessel. If it were such a cost, it is not clear why it was moved to "markup" so that no fee was payable on that sum to HLG. Mr Savage's question about "the USD 15mil" in his email to Mr Waugh on 30 September 2010 also suggests something specifically identifiable by this amount, and that it was included in the green sheet with something other than its genuine description. 2. The flexible treatment of this US$15 million sum apparent from Mr Waugh's email of 9 October 2010, and his use of inverted commas in that email only when explaining where that sum was now to be found in the green sheet, casts further doubt upon whether it was genuinely for a heavy lift vessel. We also attach significance to the absence of any explanation for why the "heavy lift" vessel was treated differently to what are described in that email as the "Leighton Vessel costs", relating to the Stealth, Mynx and Eclipse vessels, which were allocated under indirect costs. Doubt upon whether the US$15 million, or later US$10 million, was genuinely for a vessel is also raised by Mr Savage's question to Mr Waugh in the email of 11 October 2010, asking whether "[t]he 15m (now 10) is buried in the directs?", to which Mr Waugh responded "yes". Communication of confidential information to Unaoil and Mr Waugh 1. A number of emails suggest that there was leakage of information from the Ministry of Oil to Unaoil and to Mr Waugh. By way of example, the email of 29 May 2010 from Mr Al Jarah to others within Unaoil makes it clear that he was being updated as to the evaluation of bids for the Iraq Phase 1 Project by Mr Oday. Also, the email of 27 July 2010 reveals that Mr Waugh was aware of Mr Oday's three days of discussion with the Ministry of Oil and said that this likely meant that "he has verbal sanction from Ministry to proceed." The emails in September 2010 relating to both the Iraq Phase 2 Project and the Iraq Phase 1 Project indicate that Unaoil was kept informed as to matters relating to the evaluation of bids, and that Unaoil then passed some of this information to Mr Waugh. This included that the decision had been made in late-August 2010 to proceed with Leighton for the Iraq Phase 1 Contract. The leaking of this information provides some limited support for an inference that Unaoil, and their contacts, were assisting Leighton to win the Iraq Phase 1 Contract and as regards arrangements under that contract. What inference should be drawn in the circumstances? 1. Having regard to our findings as to the truth of the matters set out in the Iraq File Note and our consideration of the evidence as a whole, we are satisfied that Leighton paid money to Unaoil not just for their subcontracting package, but also for them to assist Leighton in winning the Iraq Phase 1 Contract. 2. We infer that the subcontract price for Unaoil included a significant component for that assistance and that the liquidated damages provision in the MOU was at least in part a mechanism to ensure that Unaoil was paid if the assistance it provided was successful in achieving the outcome that Leighton won the Iraq Phase 1 Contract, but Leighton did not engage it as subcontractor. We are not satisfied, with respect to sub-issue 8(f), that there was any good commercial justification for that payment other than that it provided some compensation to Unaoil for assistance provided to Leighton to win the Iraq Phase 1 Contract. Whilst it may well have included some component to pay for the services to be provided by Unaoil under art 9 of the MOUs, the evidence does not disclose any basis upon which those services could justify a payment of US$26.5 million in the context where that is around a third of the entire contract price under the MOUs and MOAs between Leighton and Unaoil. Nor is there any evidence that suggests a reason why, if the US$26.5 million was payment for the services under art 9, the MOU would not have said so. 3. We are also satisfied, on the evidence set out above, that the US$15 million, later US$10 million, described as being for a "third party vessel for heavy lift", was in fact an amount to be paid to Unaoil for its assistance to Leighton in winning the Iraq Phase 1 Contract. We would not infer that that was the sole amount referable to that assistance. We do not agree with the primary judge, at J[245], that Leighton Offshore could have included more than US$20 million as the increased cost of the Unaoil package in the green sheet if the actual cost was more than that. We infer that Mr Savage and Mr Waugh would have found it difficult to explain a larger increase, and that they were reluctant in the green sheet or in their emails to acknowledge that they were paying Unaoil for assisting them in winning the Iraq Phase 1 Contract. We also disagree with the primary judge's conclusion at J[246] that reference to the Leighton Eclipse vessel, or to LIL barges, could explain the references to the "heavy lift" vessel. The costings in the green sheet made separate reference to Eclipse and other vessels. Unlike the primary judge at J[247], we would place no significance on the fact that some changes as to how the US$15 million was referenced in the green sheet were made after the meeting of the Leighton Board on 4 October 2010. We would infer that if Mr Savage and Mr Waugh considered it necessary to misdescribe the US$15 million, that need would not evaporate after the Leighton Board meeting. 4. It may be that "third party vessel for heavy lift" was an oblique, albeit coded, reference to such assistance although we have placed no reliance upon that possibility in reaching our conclusion. 5. We would also infer that at least some of the US$78.5 million was on account of the assistance that Unaoil provided Leighton to win the Iraq Phase 1 Contract. That inference is consistent with the liquidated damages provision operating only if Unaoil was not entitled to a fee for providing the subcontracting package. That indicates to us that a component of the fee for the subcontracting package was on account of Unaoil's assistance to Leighton in winning the Iraq Phase 1 Contract. Of course, if Leighton did not win that contract the subcontracting fee would not be payable. As with the liquidated damages, the fee would only be payable if Leighton did in fact win the Iraq Phase 1 Contract. In these circumstances, the amount of the liquidated damages provides some guide as to the amount of the agreed fee to be paid to Unaoil for providing assistance to Leighton to win the Iraq Phase 1 Contract. 6. The evidence does not enable us to reach any conclusion as to whether the US$15 million, later US$10 million, formed part of the fee agreed in the MOU or was additional to that. The US$78.5 million overall fee to be paid to Unaoil is US$6.5 million shy of twice the US$42.5 million that Leighton assessed as the cost of the onshore works and is less than the $87 million which the Iraq File Note records Mr Savage having said had been paid to Unaoil for the Iraq Phase 1 Contract. If the US$10 million ultimately described as being for the "heavy lift" vessel is added to the US$78.5 million overall fee to be paid to Unaoil, then the figure is US$88.5 million, which is about US$4 million more than twice the cost, as assessed by Leighton, for the onshore works and is close to the figure given by Mr Savage to Mr Stewart on 23 November 2010. Upon either analysis, as already identified, the figures are broadly, albeit not exactly, consistent with those recorded in the Iraq File Note. Our conclusion that these figures provide general support for the truth of what Mr Savage is recorded in the Iraq File Note as having told Mr Stewart does not require us to reach any concluded view as to the amount Leighton agreed, in total, to pay to Unaoil. 7. The primary judge, in rejecting the contention of the 2011 Insurers that the Unaoil MOUs and MOAs involved corrupt payments, placed some reliance upon these documents being "vetted by Leighton's lawyers": at J[237]. We would not attach any material significance to this. We have no information about the process of vetting, nor about what Leighton's lawyers were told. It is not for us to speculate how it is that Leighton's lawyers allowed the MOUs and MOAs to be agreed in those terms. 8. We are also satisfied that to Mr Waugh's knowledge, the assistance to be provided by Unaoil included assistance being provided by Mr Oday (and there is no evidence as to what, if anything, it involved beyond this). The emails set out above show that Mr Waugh communicated directly with Mr Oday, and that Mr Oday communicated matters to Mr Waugh which gave him information relevant to the Iraq Phase 1 Contract and the evaluation of bids for the Iraq Phase 1 Project. It is also apparent that Mr Savage was aware who Mr Oday was and was also aware that he was seeking to assist Leighton. This is readily apparent from Mr Waugh's email to Mr Savage on 27 July 2010 (set out at [65] above). We would infer that Mr Savage was also aware that Mr Oday provided assistance to Leighton. 9. The evidence also satisfies us that the proposed payment to Unaoil referred to by Mr Savage in the Iraq File Note as regards the proposed variation/extension of the Iraq Phase 1 Contract was also for services by Unaoil to assist Leighton in successfully negotiating that variation/extension. Contrary to CIMIC's submission, we are satisfied that the assistance to be provided by Unaoil to Leighton went beyond "the realities of the need to have a strong connection with an onshore contractor to facilitate a successful negotiation." The evidence persuades us that something more than a connection with a contractor was to be provided by Unaoil by way of assistance. We are also satisfied, contrary to CIMIC's submission, that the payment was not simply to secure an opportunity to negotiate an extension but was for assistance in negotiating the extension. 10. That brings us to the 2011 Insurers' contention that the inference should be drawn that the payment by Leighton to Unaoil involved corrupt payments. We understand the reference to "corrupt payments" to mean the payment of one or more bribes to SOC or a person or persons within the Iraqi government out of moneys paid by Leighton. We are not satisfied that the evidence establishes that corrupt payments, in the sense in which we understand that term, were made by Leighton to win the Iraq Phase 1 Project. This is because we are not satisfied to the requisite standard that any of the money paid by Leighton to Unaoil was then paid to Mr Oday or anyone else in SOC, or within the Iraqi government. We also consider that the statement in the 8 September 2010 email referred to at [69] and [308] above that Mr Oday's help on the ground was "coming free" stands against a conclusion that corrupt payments were made to him. Contrary to the submission of the 2011 Insurers, we would not limit that statement to the ambit of the Iraq Phase 2 Contract. 11. Whilst there was an agreement in May 2009 that Mr Oday be paid a retainer by Unaoil, there is no evidence that the moneys paid by Leighton to Unaoil were used to pay Mr Oday's retainer. Whilst Unaoil paid for a hotel in London for Mr Oday, that was nearly a year before the meeting between Mr Willimont and Mr Waugh in Perth. Further, whilst there is evidence that Unaoil proposed to give Mr Oday a "treat" in Istanbul, it is not clear whether or not that happened and in any event there is no evidence that that came out of money paid by Leighton. Moreover, whilst there is a suggestion in the email of 8 September 2010 that a "dose of George Washington" could be given to Mr Oday, and that that could come from the money Unaoil received from Leighton, there is no evidence that payment was then made to Mr Oday. There is also the suggestion in the 8 September 2010 email chain, referred to above, that Mr Oday may wish to "squeeze" Mr Waugh for more money "to his gain" and that this may be Mr Oday's agenda. However, we have seen nothing that confirms that anything was paid to Mr Oday either by Leighton or out of moneys paid by Leighton. 12. One logical explanation for Unaoil being paid a fee to help Leighton win the Iraq Phase 1 Contract, in the context of the emails set out above, would be that at least some of that money was to be paid to Mr Oday or to others within SOC or the Iraqi government. However, the evidence is not sufficient to persuade us that it is more likely than not that this occurred. In reaching this conclusion we have had regard to the email on 29 May 2010, between various people within Unaoil, which makes it plain that the position that was being put to Mr Waugh as to there being some risk that Leighton may not win the Iraq Phase 1 Contract did not accurately reflect the way in which the Leighton bid was being viewed by those evaluating the two bids. That gives rise to a real possibility that in fact there was no real need for Unaoil to exert any influence over SOC in order for Leighton to win the Iraq Phase 1 Contract. 13. In these circumstances, we are not satisfied that any part of the money paid by Leighton was in fact used for corrupt payments so that Leighton would win the Iraq Phase 1 Contract. There may have been a breach of Leighton's Code of Ethics, but no submissions were made to us as to that. 14. As to CIMIC's submission that Unaoil was supporting Leighton Offshore and thereby lost the opportunity to obtain a profitable outcome from Saipem, we are unable to reach any conclusion as to what, if any, relationship Unaoil had with Saipem. The email from Mr Schwabe to Mr Waugh on 25 April 2010 records Mr Bond suggesting that Unaoil was also courting Saipem. The email of 30 May 2010 from Mr Al Jarah to Mr Willimont and others within Unaoil suggests an ongoing relationship between Unaoil and Saipem. Whether this was so, and what that relationship entailed, is not elucidated by the evidence as a whole. 15. Lest there be any doubt as to this, in declining to make a finding that the payment to Unaoil involved corrupt payments, we have approached our task of drawing inferences from the documents on the basis that the standard of proof is the balance of probabilities informed by s 140 of the Evidence Act. We would reject CIMIC's submission that the 2011 Insurers had to exclude any honest explanation before we could reach a finding that there was a corrupt payment. 16. Having regard to the matters set out above, we are not satisfied, as raised by sub-issue 8(e) in the Agreed List of Issues that the primary judge erred in concluding that: 1. there was "no evidence" that there was still a retainer of Mr Oday in existence as at April 2010 or that anyone at Leighton was made aware of any such retainer, at J[198(2)-(3)]; or 2. there was "no evidence" that any money was paid to Mr Oday or to anyone at the Ministry of Oil in connection with Leighton Offshore winning the Iraq Phase 1 and Phase 3 Contracts, at J[198(4)]. 1. Contrary to the finding at J[198(1)], however, there was evidence that a retainer from Unaoil was agreed by Mr Oday. The email of 17 May 2009, in which Mr Ahsani asks "what is the retainer" to which Mr Al Jarah responds "[i]t is $6,000 per month" is evidence that a retainer existed at that time. 2. Sub-issue 8(g) in the Agreed List of Issues is whether the primary judge erred in failing to find that the purpose of the liquidated damages article agreed between Leighton and Unaoil was to ensure Unaoil was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract. As is clear from our conclusions set out above, we have found that the various liquidated damages articles were at least in part agreed to compensate Unaoil for assisting Leighton to win the Iraq Phase 1 Contract, but we are not satisfied to the requisite standard that this was to make a corrupt payment. Nor are we satisfied that this was to make an improper payment. The 2011 Insurers did not make any submission that improper payments should be understood as anything other than payments for the purpose of a bribe and we have approached this term on the understanding that that is its intended meaning. 3. Sub-issue 8(h) in the Agreed List of Issues is whether the primary judge erred in concluding, at J[242], that no part of the US$65 million increase in Leighton's revised tender price had been demonstrated to directly relate to improper payments. Given our findings set out above, and on the understanding set out above as to the intended meaning of "improper payments", we see no error in the primary judge's conclusion. However, as set out above, we are satisfied that some of the US$65 million increase in Leighton's revised tender price in May 2010 was on account of payment to Unaoil for it to assist Leighton to win the Iraq Phase 1 Contract. Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful? 1. Against the background of the Iraq File Note as a whole, the matters set out above satisfy us for the purposes of sub-issue 8(d) that Mr Savage was aware that the payments referred to in the Iraq File Note may have been unlawful. In this regard Mr Savage's knowledge would be attributed to Leighton (CIMIC did not dispute that any knowledge that Mr Savage was found to have would be attributed to CIMIC). Knowledge of the substantial payment to Unaoil in the circumstances set out by Mr Savage as recorded in the Iraq File Note would have conveyed that possibility to someone in his position. That conclusion is also supported by the fact that Mr Savage is recorded as asking Mr Stewart not to tell Mr King of the matters that he was reporting, and did not seek to assuage Mr Stewart's discomfort or concerns that what Mr Savage was describing was what had "got AWB into trouble." As we have already said, there is no evidence before us that suggests exculpatory information that may have been known to Mr Savage. 2. Our conclusion is not dependent upon, but is reinforced by: 1. Mr Savage's use of the language of "our "friends"" in the 24 May 2010 email; 2. our finding that the US$15 million, later US$10 million, was described other than as a payment to Unaoil in the green sheets and that Mr Savage was clearly aware of that; 3. the inclusion of the liquidated damages provision in the MOUs. The email of 4 June 2020 discloses that the liquidated damages provision was explained by Mr Waugh to Mr Savage, and we would infer that Mr Savage was aware that this was a mechanism to ensure that Unaoil was paid for their assistance even if they were not engaged as subcontractor; and 4. our conclusion that a significant sum was agreed to be paid by Leighton to Unaoil for assistance from Unaoil in winning the Iraq Phase 1 Contract. 1. In this regard, we would reject CIMIC's submission that the use of the word "friends" in inverted commas is explicable simply because Mr Savage did not know "where the land lies with these people". In the context of all the evidence, the more likely explanation is that Mr Savage was aware that there might be something unlawful or improper about the arrangement that was being reached with Unaoil. 2. Thus, we infer that Mr Savage knew that the significant payment which Leighton agreed to pay to Unaoil may have been unlawful. We would infer from that that Mr Savage was also aware that the proposal that there be a similar payment for the purposes of negotiating a variation/extension of the Iraq Phase 1 Contract also may have been unlawful. The former is an additional matter that Leighton, through Mr Savage, knew but did not disclose to the 2011 Insurers. Had it been necessary to do so, we would have found that CIMIC breached its duty of disclosure under s 21, and made a misrepresentation to the 2011 Insurers, for this additional reason. 3. For the reasons set out above, however, we are not satisfied that Mr Savage, or Leighton, knew, reasonably believed or believed (all of which require something more than an awareness that the payment may have been unlawful) that the payment was unlawful. In this regard, the 2011 Insurers did not contend that "unlawful" meant anything other than payments for the purpose of a bribe and we have approached Issue 8 on the understanding that that is its intended meaning. Conclusion as to Issue 8 1. Our conclusion as to Issue 8 is that, if necessary we would have found that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note Leighton knew but did not disclose to the 2011 Insurers that the payments referred to in the Iraq File Note may have been unlawful, but not that Leighton knew, reasonably believed or believed that they were unlawful. It follows that we would have upheld grounds 1-2, 4, 7 and10, but rejected grounds 3, 5-6, 8-9 of AIG and Catlin's respective NOCs (as adopted by Chubb and Liberty). 2. We turn now to address the questions of construction raised by Issues 1 to 5. Issue 1: Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act? 1. The 2011 Insurers accepted that they were not entitled to a remedy for non-fraudulent misrepresentation or non-disclosure in respect of the non-Company Securities Claims. 2. The primary judge accepted the 2011 Insurers' submission that they were entitled, under s 28(3) of the Insurance Contracts Act, to reduce their liability in respect of the Company Securities Claims to nil. For the reasons we have given in relation to Issues 6 and 7, we uphold the factual findings that underpinned that finding. 3. At trial and on appeal, CIMIC and Zurich submitted that, as a matter of construction of cll 5.3 and 7.1, the 2011 Insurers could have no remedy under s 28(3) for non-fraudulent non-disclosure or misrepresentation, including with respect to the Company Securities Claims. Clauses 5.3 and 7.1 are set out above at [20] and [21] respectively, but for convenience are quoted again: "5.3 Continuity Notwithstanding Exclusion 3.2 ('Prior Claims and Circumstances'), cover is provided under this policy for any Claim, or circumstance, which could or should have been notified under any earlier policy, provided always: (i) the Claim, or circumstance, could and should have been notified after the Continuity Date; and (ii) the Claim shall be dealt with in accordance with all the terms, conditions, exclusions and limitations of the policy under which the Claim, or circumstance, could and should have been notified. … 7.1 Non-Rescindability This policy is not avoidable or rescindable in whole or in part and the Insurer shall have no other remedy with respect to any pre-inception misrepresentation or pre-inception non-disclosure by any Insured in connection with this policy, except with respect to Insurance Cover 1.2 ('Company Securities'). If the Insurer has a right to reduce its liability under Section 28(3) of the Insurance Contracts Act 1984 (Commonwealth) for any fraudulent misrepresentation or fraudulent non-disclosure of a matter or fact established by final adjudication of a judicial or arbitral tribunal, or any formal written admission by or on behalf of any Insured, the Insurer will only exercise such right against that Insured." (Emphasis in original.) 1. On appeal, the burden of this issue was taken up by Zurich. By grounds 7-9 of its amended notice of appeal ("NOA") Zurich contended that on the proper construction of cll 7.1 and 5.3 of the 2011 Policy the 2011 Insurers had excluded their rights under s 28(3) in respect of innocent non-disclosure and had waived Leighton's duty of disclosure under s 21(2)(d). Its interest is apparent from the table at [8] which shows its exposure as a fifth excess layer insurer for the 2010 year compared with its exposure for the 2011 year. 2. The burden of the response to Zurich's contentions was assumed by AIG and Chubb. 3. Zurich submitted (although not in this order) that, by cl 5.3, the 2011 Insurers (other than Catlin, whose Continuity Date was 30 June 2011) waived compliance with the duty of disclosure under s 21(1) (see s 21(2)). 4. Zurich also submitted that when cl 7.1 is read harmoniously with cl 5.3, the 2011 Insurers waived a remedy under s 28(3). 5. Zurich submits, correctly, that cl 5.3 is an insuring clause and provided cover for any circumstance which "could or should" have been notified under an earlier policy if the circumstance "could and should" have been notified after the Continuity Date. In the case of all of the 2011 Insurers (other than Catlin) the Continuity Date was 30 June 2005. 6. Clause 5.3 was a qualification to the exclusion under cl 3.2 that the 2011 Insurers would not be liable for any Loss attributable to any circumstance of which notice could have been given under any policy of which the 2011 Policies of insurance were a renewal or replacement. 7. Zurich submitted that, because cl 5.3 provided cover in respect of a circumstance that could and should have been notified under the 2010 Policy, but was not, the 2011 Insurers waived their duty of disclosure of such circumstances. 8. Zurich also submitted that the 2011 Insurers waived their remedies under s 28(3) in respect of the Company Securities Claims. Zurich submitted that the second paragraph of cl 7.1 addressed the Insurers' rights in respect of fraudulent misrepresentation or fraudulent non-disclosure but confined the exercise of those rights to cases where the fraudulent misrepresentation or non-disclosure had been established by final adjudication or formal written admission. In this case, the Insurers did not allege fraud so the scope of the second paragraph of cl 7.1 did not arise. It could not, on Zurich's submission, be used to construe cl 7.1 as preserving an Insurer's right to reduce its liability under s 28(3) for non-fraudulent misrepresentation or non-disclosure in respect of insurance cover for the Company Securities Claims. 9. At trial, Zurich submitted that by cl 5.3, the 2011 Insurers waived the duty of disclosure in respect of prior known circumstances. On appeal, it contended that this submission had not been addressed by the primary judge. 10. Strictly, this might be so. The primary judge fully addressed Zurich's and CIMIC's argument based on the waiver of remedies under s 28(3). Zurich's contention that there was a waiver of a duty of disclosure in respect of prior known circumstances under s 21(2)(d) is contained in two short paragraphs among many hundreds of pages of submissions with which the primary judge had to grapple. No doubt if the submission had been advanced with the same force as it was advanced on appeal, the primary judge would have dealt with it with the same care with which her Honour dealt with the multiple other issues. 11. The first thing to be noted about the first submission is that it addresses only an asserted waiver of the duty of disclosure. It does not address the 2011 Insurers' remedies under s 28(3) for misrepresentation. As we have held above, CIMIC made a misrepresentation in its signed declaration and proposal form by answering yes to the question "Is the Company aware of any facts which might give rise to a claim being made against any Directors or Officers in their capacity as Directors or Officers of the Company or its subsidiaries?" and in explanation of that answer, attaching an appendix which described various matters that did not include the fact of, or the circumstances relating to, the Iraq File Note. 12. There is nothing in the language of cl 5.3 that would amount to a waiver of the 2011 Insurers' rights under s 28(3) for misrepresentation. 13. Part of the objective matrix of facts against which the 2011 Policy is to be construed is the fact that Leighton was required to complete, and did complete, the 2011 Proposal which sought disclosure of facts of which Leighton was aware which might give rise to a claim against a director or officer (see at [94]-[95]). On Zurich's submission this would only have been required for Catlin's protection. But the 2011 Proposal, when completed, was given to AIG (then called Chartis Australia Ltd) and sent by Marsh (Leighton's broker) to Catlin and Liberty (see at [98]) and to Chubb (then called ACE Insurance Ltd). 14. Clause 5.3 is addressed to the scope of cover. It does not expressly deal with the duty of disclosure. 15. Chubb submitted that cll 3.2 and 5.3 are directed to the consequences of the Insured's knowledge of circumstances likely to give rise to claims, whereas the duty of disclosure is much wider. 16. It may be accepted that the duty of disclosure under s 21(1) is wider than disclosure of known circumstances likely to lead to claims. But this does not answer Zurich's submission that by cl 5.3 the 2011 Insurers waived the duty of disclosure of circumstances that might give rise to claims which were known to the Insured to be relevant to the 2011 Insurers' decision to accept the risk or which a reasonable Insured could be expected to know would be so relevant. 17. The 2011 Insurers submit that cl 5.3 does not waive the duty of disclosure because the second paragraph of cl 7.1 preserves the Insurers' rights in respect of fraudulent non-disclosure. 18. Zurich accepts that a waiver of the duty of disclosure would not extend to fraudulent non-disclosure. This is required by public policy: HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6; [2003] 1 All ER (Comm) 349 at [15]-[16], [68], [76], [97]-[98], [122]; Onley v Catlin Syndicate Ltd as the Underwriting Member of Lloyd's Syndicate 2003 [2018] FCAFC 119 at [73]-[79]; Viterra Malt Pty Ltd v Cargill Australia Limited [2023] VSCA 157 at [303]-[304], [464]-[467]. The fact that the second paragraph of cl 7.1, on any view, acknowledges the Insurer's right to reduce its liability, pursuant to s 28(3), in the case of a particular "Insured", whose fraud is established by final adjudication or formal written admission, is not inconsistent with Zurich's argument. 19. Although the second paragraph of cl 7.1 is not an answer to Zurich's submission that the duty of disclosure was waived, we do not accept that the duty was waived. Clear words would be expected for such a conclusion, particularly where the policies were entered into on the basis of a proposal that asked whether Leighton was aware of any circumstances which might give rise to a claim being made against any directors or officers of Leighton or its subsidiaries. 20. Further, as we find below, the fact that cl 7.1 preserves remedies for the Insurer in respect of non-fraudulent misrepresentation or non-disclosure in respect of the Company Securities Claims is inconsistent with a construction of cl 5.3 that the duty of disclosure was waived. 21. On the question whether, by cl 7.1 (read with cl 5.3), the 2011 Insurers waived their remedies under s 28(3), the primary judge said that: 1. the qualification to the first paragraph of cl 7.1 ("…except with respect to Insurance Cover 1.2 ('Company Securities')") concerned all of the preceding sentence and was therefore a complete exception to the waiver of remedies and preserved all remedies for the Company Securities Claims: at J[143]; 2. the use of "if" at the start of the second paragraph of cl 7.1 (which deals with fraudulent misrepresentation or non-disclosure) indicated that other remedies were available: at J[146(1)]; 3. the second paragraph of cl 7.1 presumes the availability of all s 28(3) remedies where there is fraud, but allows the Insurer to reduce its liability under s 28(3) to the relevant individual Insured in the case of fraud, for both the Company Securities Claims and non-Company Securities Claims: at J[146(2)]; and 4. this construction is harmonious with cll 5.1 and 5.3: at J[147]. 1. Zurich submitted that by the first paragraph of cl 7.1 the 2011 Insurers contracted out of their rights under s 28(2) to avoid the contract for non-fraudulent misrepresentation or non-disclosure. It submitted that the scope of the exception for the Company Securities Claims from the exclusion of liability in the first paragraph of cl 7.1 ("and the Insurer shall have no other remedy with respect to any pre-inception misrepresentation or pre-inception non-disclosure") was stated by the second paragraph, and the exception was confined to cases of fraud. 2. In support of that construction, Zurich relied on cl 5.3, which, it submitted, was not consistent with a construction of cl 7.1 which allowed exercise of rights under s 28(3) where there was no fraud. 3. We do not accept this submission. We agree with the primary judge that the exception at the end of the first paragraph of cl 7.1 covers the whole of the remedies referred to in that paragraph, that is, avoidance, rescission, and any other remedy. 4. It is clear from the second paragraph that, notwithstanding the use of the words "no other remedy" in the first paragraph, rights under s 28(3) are preserved in respect of fraudulent misrepresentation or non-disclosure. Those rights are limited to a particular Insured (which includes an individual director, officer or Company (meaning Leighton or any subsidiary)), and can only be exercised if fraud is formally admitted or established by adjudication. 5. To that extent "no other remedy" is qualified. It does not follow that the exception to the first paragraph in the case of the Company Securities Claims is likewise limited to a case falling within the second paragraph of cl 7.1. 6. If that were so, there would be no need for the exception. 7. For these reasons, the answer to Issue 1 is no. 8. This conclusion, coupled with our findings that Leighton breached its duty of disclosure and misrepresented its knowledge of facts which might give rise to a claim, and that the 2011 Insurers were entitled to reduce their liability for the Company Securities Claims to nil, means that grounds 1-8 of CIMIC's notice of cross-appeal in the Berkley Appeal must be dismissed. 9. AIG filed a notice of cross-appeal in Zurich's appeal in which it contended that if grounds 7-9 of Zurich's appeal were upheld and it were found that AIG was liable to indemnify CIMIC in respect of the Company Securities Claims then it was entitled to contribution from Berkley. CIMIC similarly filed a notice of cross-appeal in Zurich's appeal which was contingent on this Court upholding one or more of grounds 7-9 of Zurich's appeal. As grounds 7-9 of the Zurich Appeal have not been upheld and AIG has not been found liable to indemnify CIMIC in respect of the Company Securities Claims, and the 2011 Insurers remain liable to indemnify CIMIC in respect of the Company Securities Claims, these cross-appeals do not arise and should be dismissed. Issue 2: Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy's limit of liability (as reduced by amounts previously paid) applies to CIMIC's claims? 1. This issue was raised by Chubb which appealed against the findings that it was liable to indemnify CIMIC for the AFP Investigation Costs and the ASIC Iraq Investigation Costs notwithstanding that the Limit of Liability under the 2010 Policy had been exhausted (at [14(14)] above). It was also raised by AIG and Liberty by their NOCs, in the Zurich Appeal (at [14(5)] above). 2. The AFP Investigation Costs and the ASIC Iraq Investigation Costs were not Company Securities Claims. The 2011 Insurers' liability for those costs was not affected by Leighton's non-disclosure of the Iraq File Note. 3. The second declaration made by the primary judge on 12 October 2022 (see at [11] above) was that: "Declares that AIG and Chubb are [is] each severally liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy, subject to its Limit of Liability and a single retention of $100,000, for the following costs, but only insofar as they were paid by CIMIC after 8 May 2014: (a) the AFP Investigation Costs, being costs incurred by CIMIC in connection with an investigation by the Australian Federal Police (AFP) into matters which were the subject of a referral by CIMIC to the AFP on or about 7 November 2011, in an amount to be agreed or determined by the Court; and (b) the ASIC Iraq Investigation Costs, being costs incurred by CIMIC in connection with an investigation by ASIC into suspected contraventions of ss. 181, 184 and/or 1307 of the Corporations Act by the directors, officers and/or employees of CIMIC and/or its subsidiaries in relation to payments made to third parties during 2009 to 2011 in order to secure contracts for the development of offshore loading facilities in Iraq, in an amount to be agreed or determined by the Court." (Emphasis in original.) 1. The third declaration concerned the liability of AIG and Chubb to pay interest on the AFP Investigation Costs and the ASIC Iraq Investigation Costs. 2. By further orders made the same day, the parties agreed on the quantum of the AFP Investigation Costs and the ASIC Iraq Investigation Costs and the interest payable. 3. There was no dispute that the 2011 Policy provided cover for those costs. A defence under the Limitation Act in respect of costs paid by CIMIC before 9 May 2014 was upheld: at J[440]-[451]. There is no appeal from CIMIC in respect of that issue. 4. By its amended NOA, Chubb seeks the setting aside of the second and third declarations and the orders which quantified its liability under those declarations. It contended that the primary judge erred in "finding at J[179]-[181] that the first respondent (CIMIC) was entitled to indemnity from the appellant (Chubb) under cl 5.3 of the policy identified in J[109] (2011 Primary Policy)" for those costs "notwithstanding that the limits of indemnity under the policy referred to in J[102] (2010 First Excess Policy) had been exhausted" (emphasis in original.) 5. This issue was also raised by AIG in its NOC in the Zurich Appeal but, in its written submissions, AIG accepted that if the primary judge's construction of cl 7.1 is correct and Zurich's arguments on Issue 1 (that cl 5.3 waived rights under s 28(3) in respect of the Company Securities Claims) failed, then its NOC would fall away. 6. In the Zurich Appeal, Liberty also filed a NOC to the effect that limits of liability under the 2011 Policy were subject to the limits imposed and the payments made by AIG, Chubb and Liberty under the 2010 Policy. In the light of our findings that CIMIC is not entitled to indemnity in respect of its Company Securities Claims, Liberty is not affected by this issue. 7. Turning then to AIG's and Chubb's 2011 Primary Policy, cl 4 defined "Limit of Liability" as the amount specified in Item 5 of the Schedule, namely $30 million. 8. Clause 6.1 relevantly provided: "6.1 Limit of Liability The total amount payable by the Insurer under this policy shall not exceed the Limit of Liability... The Insurer shall have no liability in excess of all such limits, irrespective of the number of Insureds or amount of any Loss, including with respect to any Claim specified in Section 5.4 ('Related Claims or Circumstances')." 1. Clause 6.1 of Chubb's 2010 First Excess Policy was in the same terms. 2. The relevant parts of cll 3.2 and 5.3 have been quoted at [19]-[20] and [342] above. It is convenient to quote them again: "3. Exclusions The Insurer shall not be liable under any Cover or Extension for any Loss: … 3.2 Prior Claims and Circumstances subject to Section 5.3 ('Continuity'), arising out of, based upon or attributable to: (i) facts alleged or the same or related Wrongful Act(s) alleged or contained in any Claim which has been or could have been reported or in any circumstances of which notice has been or could have been given under any policy of which this policy is a renewal or replacement or which it may succeed In time; or … 5.3 Continuity Notwithstanding Exclusion 3.2 ('Prior Claims and Circumstances'), cover is provided under this policy for any Claim, or circumstance, which could or should have been notified under any earlier policy, provided always: (i) the Claim, or circumstance, could and should have been notified after the Continuity Date; and (ii) the Claim shall be dealt with in accordance with all the terms, conditions, exclusions and limitations of the policy under which the Claim, or circumstance, could and should have been notified." (Emphasis in original.) 1. Chubb submitted that the circumstances notified during the currency of the 2011 Policy could have been notified during the currency of its 2010 First Excess Policy, and could and should have been notified after the Continuity Date (30 June 2005) and were accordingly to be dealt with in accordance with all the "terms, conditions, exclusions and limitations" under the 2010 Policy under which the circumstance could and should have been notified (cl 5.3). Chubb submitted that, because those circumstances could have been and should have been notified during the currency of the 2010 Policy, the Claim when made under the 2011 Policy should be dealt with in accordance with the limitations of its 2010 Policy. If the claim or circumstance had been notified under the 2010 Policy, Chubb's liability under its 2010 First Excess Policy would have been exhausted and it would only be liable if claims in the 2010 year exceeded $100 million (in which case it would be liable as fifth excess insurer: see [8]). 2. The primary judge found, at J[175]-[176], that Leighton could have notified the contents of the Iraq File Note and that the circumstances of the 2012 Notification "could or should have been notified" under the 2010 Policy. Thus, her Honour held that cl 5.3 was engaged under the 2010 Policy. (Her Honour's findings and consequent declaration are challenged by the 2010 Insurers as addressed below). 3. Chubb contended below that, in respect of the 2011 Policy, by the terms of cl 5.3(ii), CIMIC's claim was to be "dealt with" in accordance with the limitations under the 2010 Policy. The relevant limitation was Chubb's Limit of Liability under the 2010 Policy, which, so far as its liability under the first excess layer is concerned, had been exhausted. 4. The primary judge rejected this contention. Her Honour found: "[179] Instead, I accept the submissions of CIMIC (and some of the 2010 Insurers) that, because the 2012 Notification was made under the 2011 Policy, it is the 2011 Policy that must provide indemnity up to the 2011 Limit of Liability. The 2010 Limit of Liability applies for the particular claim, but without regard to any payments made under the 2010 Policy that may have exhausted 2010 liability caps, for at least the following reasons: (1) While cl 5.3(ii) mandates that the claim is dealt with "in accordance with all the terms, conditions, exclusions and limitations of the policy under which the Claim or circumstance could and should have been notified", the purpose of the clause as a whole was to provide cover for claims that might have been made earlier but were not. The policy holder pays a premium based on the Insurer's assessment of the risk that some claims may be made, in effect, out of time. (2) The use of the word "limitations" does not add anything to the language of "terms, conditions and exclusions". None of those words are defined terms, and, in contrast, "Limit of Liability" is a defined term and that was not used in cl 5.3. (3) The parties' objective intentions were that the Insured ought not receive better terms than were offered at the time the claim ought to have been notified and the Insured is restricted by cl 5.3(ii) in its recovery based on the historical terms, but nonetheless paid pursuant to the current policy. That is consistent with cl 6.1, which refers to the Limit of Liability payable "under this policy". Thus, cl 6.1 sets the ceiling of liability for all claims under the 2011 Policy. (4) The phrase "limitations of the policy" in cl 5.3 does not include factual events outside the policy, such as the making of claims and payments under that earlier policy that eroded the size of the available indemnity under that earlier policy. (5) Because the parties knew that the insurers were not the same each year and there was no practical mechanism in cl 5.3 for notification by earlier insurers about payments they had in fact made tells against the 2011 Insurers' construction requiring application of the remaining 2010 Limit of Liability. (6) I consider the 2011 Insurers were protected from an insured intentionally not notifying in the earlier year to obtain the benefit of the 2011 Limit of Liability, by the prohibitions on fraudulent failures to disclose, and/or breaches of obligations of utmost good faith. [180] Therefore, I consider the proper construction is that payment for a cl 5.3 claim is made under the 2011 Policy, but applying the 2010 terms, including the 2010 Limit of Liability, without regard to payments that had in fact been paid pursuant to the 2010 Policy. This means, for example, if a claim was made under cl 5.3 of the 2011 Policy, then the 2011 Insurers were entitled to enforce the 2010 Limit of Liability in relation to that claim, but also the 2011 Limit of Liability overall for all claims in that policy period. This satisfies the language of cl 5.3 requiring that the claim is "dealt with" in accordance with the limitations of the 2010 Policy and that the claim is paid "under this [2011] Policy"." (Emphasis in original.) 1. The primary judge held, at J[152], that the 2011 Policy was a replacement of the 2010 Policy as it concerns the same cover. On the appeal, Chubb submitted that the 2011 Primary Policy replaced the 2010 Primary and First Excess Policies in the sense contemplated by cl 3.2 (see table at [8]). Zurich and CIMIC did not dispute this. 2. Chubb submitted that the purpose of cl 3.2 was to confine the Insurers' exposure under the 2011 Primary Policy to circumstances arising and claims made during the period of cover. Clause 5.3 extends cover to claims of that kind, but subject to the qualifications in cl 5.3(i) and (ii). The chapeau to cl 5.3 protects the Insured from the consequences of its failure to notify circumstances during the prior period of cover, whilst cl 5.3(ii) limits the Insurers' exposure to that which would have existed had it done so. The Insured was neither to be penalised by its failure to notify circumstances when they ought to have been notified, nor rewarded for its failure to do so. 3. Chubb submitted that the primary judge's finding at J[179(3)] that the "parties' objective intentions were that the Insured ought not receive better terms than were offered at the time the claim ought to have been notified…" was inconsistent with her Honour's conclusion that the aggregate limit imposed by cl 6.1 of the 2010 Policy should not apply to a claim under cl 5.3 of the 2011 Primary Policy. 4. Chubb also submitted the use of the word "limitations" in cl 5.3(ii) in addition to the words "terms, conditions and exclusions" should not be treated as being redundant, but rather indicated that the indemnity under cl 5.3 was not to exceed that which would have been available under the prior cover. It submitted that the qualifying words in cl 5.3(ii) "of the policy" did not support the primary judge's conclusion at J[179(4)] that the limitations did not include factual events outside the policy, including the payment of other claims that eroded the available cover under the 2010 Policy. Chubb submitted that terms, conditions, exclusions and limitations will invariably operate by reference to "factual events outside the policy". Chubb also challenged the primary judge's finding at J[179(5)] that there was no practical mechanism in cl 5.3 for notification by earlier insurers about payments that had in fact been made. Chubb referred to the fact that this information could be required to be provided by the insured. 5. AIG's and Liberty's submissions were generally to the same effect. Their exposure under their 2010 Policies had also been exhausted (see [8]). AIG submitted that the primary judge erred in finding at J[179] that the 2010 Limit of Liability applies for the particular claim, but without regard to any payments made under the 2010 Policy that may have exhausted 2010 liability caps. AIG submitted that this treated the $20 million aggregate Limit of Liability under the 2010 Policy as if it were a liability that applied to each particular claim. 6. CIMIC and Zurich submitted that in cl 5.3(ii) "limitations" when used in the phrase "terms, conditions, exclusions and limitations" was to be construed having regard to its associated words "terms, conditions, exclusions". They invoked Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207 at [30] where this Court, in describing the principle of interpretation noscitur a sociis, said that the linking of words may indicate they should be understood in the same sense; or where a word "stands with" other words it must mean something analogous to them. 7. Zurich identified provisions of the 2011 Policy that would be characterised as "limitations", namely cl 5.5, which obliged the Insured to defend any claim made against it and required the Insured to provide reasonable assistance and cooperation with the Insurer in defence of a claim and otherwise regulated how a claim should be defended; cl 5.6, which prohibited an Insured from admitting liability or entering into any settlement without the consent of the Insurer (subject to qualifications where senior counsel's advice was obtained); and cl 5.7, which was said to limit the indemnity available to the Insured to covered matters and persons. Clause 5.7 dealt with how liability for a claim should be allocated between the Insurer and the Insured, where the claim was partly covered under the policy and partly was not. 8. Both Zurich and CIMIC noted that cl 5.3 provided that the cover provided by that clause was "provided under this policy", that is, under the 2011 Policy. Clause 6.1 provided that the total amount payable by the Insurer "under this policy" should not exceed the Limit of Liability. 9. The language of Chubb's 2010 Policy was the same. The limit of liability there referred to was liability "under this policy", viz the 2010 First Excess Policy. But, so Zurich and CIMIC submitted, a claim or circumstance notified under the 2011 Policy, which would otherwise be excluded by cl 3.2 but for cl 5.3, was nonetheless a claim or circumstance notified under the 2011 Policy. 10. CIMIC noted that cl 5.3 did not, in terms, deem the coverage response of the 2011 Policy to be as though the claim were to be treated as being made during the period of the earlier policy, nor provide for a general entitlement for the Insurer to reduce its exposure to account for prejudice suffered because the notification was not made at the time it could have been made. CIMIC submitted that express provisions in those terms, which were more favourable to the insurer, had been around for many years, citing Aussie Tax Pty Ltd v Markel Capital Limited [2008] VSC 592 at [11] (Byrne J); Tosich v Tasman Investment Management Limited [2008] FCA 377 at [32] (sic; scil. [46]) (Gyles J); Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (Liability Judgment) [2023] FCA 190 at [67] (Lee J); Avant Insurance Ltd v Burnie [2021] NSWCA 272 at [24] (McCallum JA and Simpson AJA) and Cantone v Insurance Australia Limited [2022] FCA 1009 at [42] (Allsop CJ). 11. However, it is rarely useful to demonstrate that a clause whose meaning is disputed could have been made clearer by use of other language. It might equally be said that cl 5.3(ii) of the 2011 Policy could have provided that the claim should be dealt with in accordance with the terms, conditions, exclusions and limitations of the policy under which the claim or circumstance could and should have been notified "subject to the Limit of Liability under cl 6.1 of this Policy." 12. Zurich submitted that the differently constituted towers of insurance in 2010 and 2011 was a contextual matter which did not indicate that the parties intended that the Limits of Liability could be transposed from one policy period to the other. 13. We return to this below. 14. Zurich and CIMIC also took issue with the suggested commercial rationale for cl 5.3 that the Insured should be neither penalised nor rewarded for having failed to notify a claim or circumstance in the earlier policy period. We also return to this submission below. 15. The parties' submissions touched on the use of the disjunctive "could or should have been notified under any earlier policy" in the chapeau to cl 5.3 and the use of the conjunctive in cl 5.3(ii), "could and should have been notified". No party suggested that anything in particular turned on this. We agree. If the use of the disjunctive "or" and the conjunctive "and" were deliberate, then in the chapeau "should" was redundant and in cl 5.3(ii) "could" was redundant. 16. The clause is not to be approached as a model of the draughtsman's art. 17. At first blush, there is some rhetorical attraction to Chubb's submission that the commercial purpose of cl 5.3 is to ensure that the Insured be neither penalised nor rewarded for its failure to notify circumstances, so that the clause should operate to protect the Insured from the consequences of its failure to notify circumstances in the prior period of cover, whilst at the same time limiting the Insurer's exposure to that which would have existed had it done so. 18. But relief of the Insured from penalty and reward for the Insured are effectively the same thing. Moreover, the purpose has to be able to fit within the contractual language. 19. If there had been no or little erosion of cover in respect of the 2010 Policies but substantial erosion under the 2011 Policies, so that the cover under the 2011 Primary Policy had been eroded, then Chubb's construction of the words used in cl 5.3 would indeed reward the Insured (which Chubb would characterise as not penalising the Insured) for having failed to notify circumstances during the 2010 year. In the same way as between the Insured and the 2011 Primary Insurers, on Chubb's argument, it can be said that the Insured was rewarded and not penalised for not having notified the circumstances in the earlier policy year. 20. But the construction of cl 5.3(ii) cannot depend upon the happenstance of which year's cover has been more greatly eroded. 21. It is inapt to refer to the Insured being either rewarded or penalised by failing to make a claim when a claim could and should have been made under an earlier policy. Given that Leighton had 10 layers of insurance up to $200 million, it would have cover for the claims whether circumstances were notified in 2010 or in 2011 (except in respect of the Company Securities Claims if insurers were entitled to reduce their liability to nil for misrepresentation or non-disclosure, or in the case of fraud). If the circumstances concerning the Iraq File Note had been notified during the period of the 2010 Policy and a claim had been made under that policy for the AFP Investigation Costs and the ASIC Iraq Investigation Costs, although neither AIG's 2010 Primary Policy nor Chubb's 2010 First Excess Policy would have been engaged having regard to the other claims paid, CIMIC could have pursued the claim against Berkley and/or Swiss Re. 22. It is the excess insurers in each policy year who will have the greatest financial interest in the construction of cl 5.3. We agree with CIMIC's submission that it would be dangerous to speculate on the commercial purpose of the clause when the Court has no knowledge not only of the commercial positions of the Insured and the primary insurers, but of the excess insurers. 23. In our view, the critical words are those in the chapeau to cl 5.3 that "cover is provided under this policy" (emphasis added) and the distinction between that language and the language of cl 5.3(ii) that the claim is to be "dealt with" in accordance with the terms, conditions, exclusions and limitations of the policy under which the claim or circumstance could and should have been notified. It is clear from the chapeau to cl 5.3 that it is the 2011 Policy which provides the cover. Hence, the Limit of Liability is prescribed by cl 6.1 of the 2011 Policy, which refers to the "total amount payable by the Insurer under this policy" (emphasis added). Cover under cl 5.3 is provided "under" the 2011 Policy. 24. We agree with Zurich's and CIMIC's submission that in the phrase "terms, conditions, exclusions and limitations of the policy…", "limitations" takes its meaning from the other words used. No doubt that involves surplusage. But it is not always the case that in a policy such as this it should be taken that each word should be given separate work to do. 25. It is also to be noted that the word on which Chubb places reliance, "limitation", is not the word used in cl 6 of both the 2010 and 2011 Policies. Clause 6.1 of those policies refer to the Insurer's "Limit of Liability" being the amount specified in Item 5 of the Schedule ($30 million in the case of the 2011 Policy). 26. Zurich challenged the primary judge's finding in the chapeau to J[179] that the 2010 Limit of Liability applies for the particular claim (our emphasis). Although it is strictly unnecessary to decide this question, we agree. Because the cover provided by cl 5.3 is cover provided under the 2011 Policy, the aggregate Limit of Liability applicable to the claim is that provided for by cl 6.1 of the 2011 Policy. 27. For these reasons, we agree with the primary judge's conclusion that the erosion of AIG's liability under the 2010 Primary Policy and Chubb's liability under the 2010 First Excess Policy did not affect their liability for the AFP Investigation Costs and the ASIC Iraq Investigation Costs under the 2011 Primary Policy. 28. It is accordingly unnecessary to consider what the position would have been had we upheld Chubb's appeal where AIG did not itself appeal from the primary judge's second declaration and consequential orders, but where Chubb's and AIG's liability under the 2011 Primary Policy is joint. 29. Accordingly, Issue 2 should be answered no. Chubb's amended NOA in the Chubb Appeal should be dismissed. Issue 3: What is the proper construction of cl 3.2(i) of the 2011 Policy? Issue 4: What is the proper construction of cl 5.1 of the 2010 Policy? Issue 5: If cl 5.1 is to be construed as contended for by Berkley, on the primary judge's findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy? 1. Issue 3 only arises under ground 9 of CIMIC's notice of cross-appeal in the Berkley Appeal. Ground 9 only arises if the primary judge erred in finding that during the period of the 2010 Policy, Leighton was aware of facts that could have been notified to Berkley under cl 5.1 of the 2010 Policy. Issues 4 and 5 raise that ground. 2. Clauses 5.1 and 5.4 have been quoted at [20] above. It is convenient to quote them again here: "5.1 Notification of Claims and Circumstances The Covers provided under this policy are granted solely with respect to Claims first made against or by an Insured during the Policy Period, or applicable Discovery Period, or accepted as such in accordance with Section 5.4 ('Related Claims or Circumstances'), only if such Claims have been notified to the Insurer as soon as practicable, after the Policyholder's Risk Manager or General Counsel (or equivalent position) first becomes aware of such Claim, but in all events no later than either: (i) during the Policy Period or applicable Discovery Period; or (ii) within 60 days after the end of the Policy Period or the applicable Discovery Period, as long as notice is given to the Insurer within 60 days after such Claim was first made against an Insured. Any Insured may, during the Policy Period or applicable Discovery Period, notify the Insurer of any circumstance reasonably expected to give rise to a Claim. The notice must include the reasons for anticipating that Claim, and full relevant particulars with respect to dates, the Wrongful Act (if applicable) and the potential Insured and claimant concerned. The details of any other insurance policy which may apply to any Loss covered under this policy shall be reported to the Insurer within a reasonable time of any Claim notification. All notifications relating to Claims or circumstances must be in writing or sent by facsimile to the address in Item 13 of the Schedule. … 5.4 Related Claims or Circumstances If a Claim or circumstance is notified under this policy, then any subsequent Claim, alleging, arising out of, based upon or attributable to the facts or Wrongful Act alleged in that Claim, or described in that circumstance, shall be deemed to have first been made at the same time as that Claim was first made or that circumstance notified, and notified to the Insurer on the date the notices were first provided. …". (Emphasis in original.) 1. Berkley, who took the lead for the 2010 Insurers on this issue, submitted that, in order for the Insured to be able to notify circumstances "reasonably expected to give rise to a claim", the Insured had to have an actual, subjective and reasonable expectation that the circumstances would give rise to a claim. The Insured's reasons for anticipating "that" claim had to be provided to the Insurer. It submitted that the primary judge erred in finding that Leighton could have notified the 2010 Insurers during the period of cover of the 2010 Policy of the contents of the Iraq File Note because, so it submitted, the evidence adduced by Leighton of its officers' subjective understanding was that they had no expectation that the circumstances attending the Iraq File Note were circumstances "reasonably expected to give rise to a Claim". Under the rubric of Issue 5, it challenges the primary judge's finding that CIMIC could have notified the relevant circumstances under cl 5.1. 2. By ground 9 of its cross-appeal (Issue 3), CIMIC challenges the primary judge's finding that the exclusion in cl 3.2 of the 2011 Policy (or any of the 2011 Excess Policies) was enlivened. 3. Issues 4 and 5 (and the consequential Issue 3) principally arise from the declaration made by the primary judge that: "13 Declares that, by 23 November 2010, CIMIC (then Leighton) was aware of the following circumstances: (a) on 23 November 2010, Leighton's incoming chief executive officer, Mr David Stewart, had a conversation with a co-chief operating officer, Mr David Savage, during which Mr Savage made representations to the effect of those recorded in the Iraq File Note (the content of which is set out at [58] of the decision of Peden J dated 27 July 2022); and (b) the matters identified in [318] of the decision of Peden J dated 27 July 2022, which, collectively, were reasonably expected to give rise to a Claim (as defined in the 2010 Primary Policy) pursuant to cl 5.1 of the 2010 Primary Policy and accordingly could have been notified to each of the Second Defendant and Sixth to Tenth Defendants under their respective excess policies." 1. For the reasons we give below in relation to Issues 13 and 15, we have concluded that the primary judge erred in making that declaration. The principal reason is that the declaration did not determine whether or not the 2010 Insurers would be obliged to indemnify CIMIC if a claim on the 2010 Insurers were made. It was instead relevant to only some part of the issues that might be expected to arise if such a claim were brought. Because CIMIC has not made a claim against the 2010 Insurers, the issue is theoretical (Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 at 437-438; [1972] HCA 61) or hypothetical (Bass v Permanent Trustee Company Limited (1999) 198 CLR 334 at 356-357; [1999] HCA 9 ("Bass")). Also it would have the tendency to complicate the determination of issues which would arise if such a claim were made and embarrass the judge who might have to determine such a claim where the facts elicited might be different: Minister for Immigration and Multicultural Affairs v Ozmanian (1996) 71 FCR 1 at 32-33 ("Ozmanian"). 2. In the light of that conclusion, any views we expressed on Issues 3, 4 or 5 would be obiter except in so far as they arise on AIG's claim for contribution against Berkley (Issue 11). Given that any views we expressed, particularly in relation to Issue 5, would be based upon the evidence as adduced before the primary judge, which might be different from the evidence adduced on a new claim, if one were brought, any conclusions we expressed would be liable to complicate any future hearing against the 2010 Insurers. 3. Nor would it be appropriate to express a view on the construction of cl 5.1 where it is unnecessary to do so for the disposition of these proceedings, where that may be expected to be a live issue in any future proceeding against the 2010 Insurers and where the submissions in any such future proceeding might differ from those advanced below or in this Court. As a general proposition, courts, at least courts below the High Court, should confine themselves to deciding only those issues which they need to decide: Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32 at [76] recently applied in Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71 at [19] (Leeming JA). 4. In so far as we have found it necessary to reach conclusions on these issues on AIG's cross-claim against Berkley for contribution for the AFP Investigation Costs and the ASIC Iraq Investigation Costs, to the extent our conclusions may give rise to issue estoppels, such estoppels would only arise as between AIG and Berkley. Issue 9: Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified several additional matters under cl 5.1 and/or s 40(3)? 1. Given our findings and reasoning below concerning Issues 13 and 15, and why we consider that the primary judge erred in making the declaration in Order 13, it is neither necessary nor appropriate to answer Issue 9. 2. We turn now to Issues 10 to 16. Issue 10: Did the primary judge err in identifying the retention applicable to CIMIC's claim against the 2011 Insurers? 1. This issue arose from cl 6.2 of the 2011 Policy, which relevantly provided: "6.2 Retention The Insurer will only pay for any amount of Loss which is in excess of the Retention. The Company will be liable for the Retention as specified in Item 8 of the Schedule which will remain uninsured. A single Retention will apply to all Loss arising from any Claim specified In Section 5.4 ('Related Claims or Circumstances')." 1. As the primary judge said at J[487]-[488], in light of her Honour's findings that the 2011 Insurers were not liable to pay CIMIC for the Company Securities Claims, the question of construction does not arise. As the 2011 Insurers are entitled to reduce their liability for the Company Securities Claims to nil, cover is provided only for the non-Company Securities Claims (see above at [5(1)]-[5(3)]) and the relevant retention is $100,000. Issue 11: Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re? 1. This issue arose from AIG's cross-claim against Berkley and Swiss Re. AIG sought: "1. Equitable contribution from the First Cross Defendant (Berkley) and Second Cross Defendant (Swiss Re) totalling 50% of any amount paid by the First Defendant/Cross-Claimant to the Plaintiff in these proceedings and apportioned as follows: 1.1 the uneroded balance of the Limit of Indemnity under the Third 2010 Excess Policy (as defined in paragraph 80 of the Commercial List Statement filed on 9 June 2020), from Berkley; and 1.2 the remainder from Swiss Re." 1. In that cross-claim, AIG sought relief from Berkley and Swiss Re if, contrary to its denial of liability, it was liable to indemnify CIMIC for its alleged loss or part thereof in respect of: 1. the AFP Investigation Costs; 2. the ASIC Iraq Investigation Costs; 3. the MCI Class Action Defence Costs; 4. the Inabu Class Action Defence Costs; and 5. the Inabu Settlement Amount. 1. AIG pleaded that Mr Stewart and Mr Savage, and CIMIC, had actual knowledge of the matters recorded in the Iraq File Note and that CIMIC's alleged loss arose out of, or was based upon, or was attributable to, the Iraq File Note and the facts, matters and circumstances recorded in it. It pleaded that, had CIMIC notified the 2010 Insurers under the 2010 Policies of the Iraq File Note or of the matters recorded in it during the period of the 2010 Policies, then any subsequent claim arising out of the Iraq File Note or the matters recorded in it would be deemed to have first been made during the period applicable to the 2010 Policies and Berkley and Swiss Re would be liable to indemnify CIMIC for its alleged loss. 2. It also pleaded that, had CIMIC notified the 2010 Insurers under the 2010 Policies after the Policy Period applicable to those policies then, by reason of s 54 of the Insurance Contracts Act, Berkley and Swiss Re could not refuse to pay a claim arising out of the Iraq File Note or the matters recorded in it. 3. AIG alleged that, if it were liable to indemnify CIMIC for its alleged loss (or part thereof) under the 2011 Primary Policy, Berkley and Swiss Re were liable to indemnify CIMIC for the same loss under the third 2010 Excess Policy and the fourth 2010 Excess Policy respectively. It sought equitable contribution for 50% of its liability. 4. AIG did not plead that any of Leighton's officers expected that the circumstances recorded in the Iraq File Note would or might give rise to a claim. 5. The primary judge found: "[552] In my view, the steps taken by Leighton to enforce its indemnity under one policy, and not the other, are subsequent events, which do not affect the existing right of an insurer to seek contribution from the other. AIG incurred the liability to indemnify Leighton at the time of the 2012 Notification. That is, the 2012 Notification "triggered" the Policy. However, because of its knowledge during the 2010/11 Policy Period, I consider that Leighton could have notified the 2010 Insurers of the circumstances of the Iraq File Note under the 2010 Policy, and if it had done so, the 2010 Insurers could have been liable for the losses later incurred by CIMIC. [553] Therefore, Leighton had a choice to seek indemnity under either the 2010 Policy or the 2011 Policy, given that each insurer had insured against the same risk. It is this choice that informs the availability of the equitable right of contribution. … [563] I accept that, if necessary, AIG is entitled to equitable contribution of 50% from Berkley and Swiss Re. Berkley is liable to contribute up to its limit of liability under the 2010 Third Excess Policy and Swiss Re is liable to contribute the balance. Quantum will be determined at the Separate Hearing." (Emphasis added.) 1. As noted above, the primary judge did declare that AIG and Chubb were liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy (subject to its Limit of Liability and a single retention of $100,000) for costs paid by CIMIC after 8 May 2014 for the AFP Investigation Costs and the ASIC Iraq Investigation Costs. 2. The primary judge also ordered: "9 Orders that, within 21 days of receiving notice in writing from AIG that AIG has paid to CIMIC the AFP Investigation Costs and the ASIC Iraq Investigation Costs payable by AIG pursuant to Declaration 2 above, the First Cross Defendant (Berkley) must pay to AIG an amount that is equal to 50% of the amount paid by AIG to CIMIC pursuant to Declaration 2 above (the 50/50 Contribution), less any amount that exceeds the uneroded balance of the Limit of Indemnity that applies under the Third Excess Layer Insurance Policy No. DAU102D32603 and covering CIMIC for the Policy Period from 30 June 2010 to 30 June 2011. 10 Notes that AIG agrees not to send any notice in writing pursuant to Order 9 (the Equitable Contribution Order) to the first cross-defendant (Berkley) that AIG has paid to CIMIC the AFP Investigation Costs and the ASIC Iraq Investigation Costs payable by AIG pursuant to Declaration 2 above until after: a) the determination of any appeal by Berkley against the Equitable Contribution Order (in the event of Berkley's appeal being unsuccessful); or b) the expiration of the time period within which Berkley must file any such appeal. 11 Notes that Berkley agrees that if: a) its appeal against the Equitable Contribution Order is unsuccessful; or b) it fails to appeal against the Equitable Contribution Order, then within 21 days of receiving notice in writing from AIG that AIG has paid to CIMIC the AFP Investigation Costs and the ASIC Iraq Investigation Costs payable by AIG pursuant to Declaration 2 above (the AIG AFP and ASIC Costs), it will pay to AIG an amount that is equal to: c) 50% of the amount paid by AIG to CIMIC pursuant to Declaration 2 above (the 50/50 Contribution); d) less any amount that exceeds the uneroded balance of the Limit of Indemnity that applies under the Third Excess Layer Insurance Policy No. DAU102D32603 and covering CIMIC for the Policy Period from 30 June 2010 to 30 June 2011; e) together with interest on that amount in accordance with section 101 of the Civil Procedure Act 2005 (NSW) for the period commencing 21 days after AIG paid the AIG AFP and ASIC Costs. 12 AIG's cross claim against Swiss Re is dismissed." 1. The reason for the dismissal of the cross-claim against Swiss Re was that its level of insurance was not reached having regard to the dismissal of CIMIC's claim against the 2011 Primary Insurers for the costs associated with the Company Securities Claims. 2. In its NOA, Berkley contended that AIG had no right of contribution against it because: 1. clause 5.1 of the 2010 Policy had never been engaged by CIMIC as no notice of circumstances had been given during the 2010 Period or the discovery period, or at all; 2. CIMIC had always denied that it had the requisite knowledge that would have enabled it to give such notice; 3. the 2010 Policy would not have responded to any relevant claim unless and until cl 5.1 of the 2010 Policy was duly engaged; 4. the 2010 Policy did not respond to CIMIC's claim against AIG under AIG's 2011 Policy (and accordingly Berkley and AIG did not have coordinate liabilities to CIMIC); and 5. for equitable contribution to be available, there must be a coordinate liability at the time of the "insuring clause event": QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd (2009) 24 VR 326; [2009] VSCA 124 at [67]-[68]. In this case AIG contends that the occurrence of the "insuring clause event" was during the period of the 2010 Policy (or the discovery period) and at that time the 2011 Policy had not yet incepted. If the "occurrence of insuring clause event" was in the 2011 Period, the 2010 Policy did not respond. 1. Berkley also contended that the primary judge's finding on Berkley's liability to pay equitable contribution to AIG was inconsistent with findings her Honour made when considering what form of declaration should be made in relation to the 2010 Policies. 2. In its further amended summons, CIMIC had sought a declaration that it may be: "… entitled, in reliance upon section 54(1) of the Insurance Contracts Act and the 'Notification' and 'Deeming' clauses incorporated into each of the following Policies, to notify circumstances, being the existence and contents of a handwritten document (the Iraq File Note) created by a former co-chief operating officer and former CEO of CIMIC, David Stewart (Stewart), appearing (on its face) to be dated 23 November 2010". 1. The primary judge declined to make a declaration in a form which interacted with s 54 and noted that the Court had been asked not to consider the operation of s 54. 2. The above form of declaration was abandoned by CIMIC. Hence, her Honour's observation that she had been asked not to consider the operation of s 54. Her Honour concluded that the first declaration proposed by CIMIC containing a reference to s 54(1) ought not to be made. In relation to that, her Honour said: "[637] CIMIC has not yet notified and made a claim against the 2010 Insurers and therefore section 54(1) has not been enlivened. Therefore, even if I did consider the operation of section 54 IC Act in the context of the First Declaration, the operation of the provision is premised on there already being, in fact, a claim by the insured. As the plurality (McHugh, Gummow and Hayne JJ) found in FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641 at 659 [40]: Section 54 directs attention to the effect of the contract of insurance on the claim on the insurer which the insured has in fact made. It is not concerned with some other claim which the insured might have made at some other time or in respect of some other event or circumstance. It requires the precise identification of the event or circumstance in respect of which the insured claims payment or indemnity from the insurer. That there is already a claim in existence is the "starting point": Antico v Heath Fielding Australia Pty Ltd (1997) 188 CLR 652 at 669 (Dawson, Toohey, Gaudron and Gummow JJ). Therefore, I decline to make the First Declaration." (Emphasis in original.) 1. Berkley also contended that AIG's claim for equitable contribution was statute barred. 2. As Berkley rightly submitted, the finding at J[552] that "the 2010 Insurers could have been liable for the losses later incurred by CIMIC" (emphasis added) does not establish that they were under a coordinate liability. That conclusion could only be reached if it were found that Berkley would have been liable for the AFP Investigation Costs and ASIC Iraq Investigation Costs ("Investigation Costs") if Leighton had notified it of the circumstances of the Iraq File Note during the period of the 2010 Policy, or, so it was argued, after the inception of the 2011 Policies. 3. The primary judge made no such finding. Her Honour found that Leighton could have notified the circumstances relating to the Iraq File Note to the 2010 Insurers in 2012, but whether the 2010 Policy would have responded if the circumstances were notified outside the period of the Policy would depend upon the application of s 54. 4. For AIG to be entitled to contribution from Berkley for the Investigation Costs CIMIC incurred, both must be liable to CIMIC and their liability must be coordinate. That will be so where there is double insurance, that is, where both insurers are liable to the insured for the same loss and where payment under one policy will relieve the other insurer from a liability which it would have if a claim had been made against it: Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342 at 352; [1969] HCA 55 ("Albion Insurance Co Ltd"). Both insurers' obligations must be of "the same nature and to the same extent": HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31 at [39]. It is not necessary that the insurances be identical, provided they insure against the same risk, as held in Albion Insurance Co Ltd: "There is no double insurance unless each insurer is liable under his policy to indemnify the insured in whole or in part against the happening which has given rise to the insured's loss or liability." (per Barwick CJ, McTiernan and Menzies JJ at 346). "What attracts the right of contribution between insurers, then, is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained". (per Kitto J at 352). 1. The requirement that insurers be under a coordinate liability means that one cannot have contribution from the other if the other could not have had contribution from the first: HIH Claims Support Ltd v Insurance Australia Ltd at [41] approving Caledonia North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123 at 1182 (Lord Sutherland). 2. Without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley for the Investigation Costs. If the notification of circumstances of the Iraq File Note had been given in the policy period applicable to Berkley's 2010 Third Excess Policy, then AIG's 2010 Primary Policy would not have responded because the limit of cover under its policy was exhausted. Only Berkley's 2010 Third Excess Policy would have responded. There would have been no mutuality of obligation and no coordinate liability. 3. The primary judge's relevant findings have been quoted at [438] above. Her Honour did not identify the relevant time at which notification of circumstances to the 2010 Insurers should be taken to have been given so as to give rise to coordinate liabilities between AIG and Berkley. Her Honour recorded at J[536] that AIG had submitted that Leighton's failure to notify during the 2010 Policy Period was an omission to which s 54 could apply. This was a claim that AIG had pleaded. But it also pleaded that, had CIMIC notified the Insurers under the 2010 Policies of the Iraq File Note or to facts, matters and circumstances recorded in it at any time after the policy period applicable to the 2010 Policies, then, by reason of s 54, Berkley could not have refused to pay a claim arising out of the Iraq File Note or the facts, matters and circumstances recorded in it by reason only of CIMIC's failure to give them notice of the File Note and the circumstances recorded in it during the 2010 Policy Period. 4. Berkley submitted that because CIMIC had not made a claim on it, s 54 can have no application. It notes that CIMIC did not press its original claim for a declaration that it remained entitled, in reliance upon s 54 and the "Notification" and "Deeming" clauses (cll 5.1 and 5.4), to notify circumstances being the existence and contents of the Iraq File Note: at J[612]. It submitted that if, as was ultimately common ground between CIMIC and the 2010 Insurers, no declaration involving s 54 could be made, because no claim had been made by CIMIC on those Insurers and there was no clear identification of what had been omitted which could attract the operation of s 54, it followed that AIG could not claim contribution relying on s 54. 5. Berkley relied upon FAI General Insurance Co Limited v Australian Hospital Care Pty Limited (2001) 204 CLR 641; [2001] HCA 38 (McHugh, Gummow and Hayne JJ) ("Australian Hospital Care"): "[40] Section 54 directs attention to the effect of the contract of insurance on the claim on the insurer which the insured has in fact made. It is not concerned with some other claim which the insured might have made at some other time or in respect of some other event or circumstance. It requires the precise identification of the event or circumstance in respect of which the insured claims payment or indemnity from the insurer. For example, in Greentree [Greentree v FAI General Insurance Co Ltd (1998) 44 NSWLR 706; [1998] NSWSC 544] the insured claimed indemnity against liability for a claim which the third party had first made on it outside the period of cover. (To distinguish between the claim which a third party makes on the insured, and the claim which the insured makes on the insurer, it is convenient to refer to the former as the "demand" by the third party.) The insured's claim necessarily incorporated a temporal dimension. The contract of insurance applied only if the third party's demand on the insured was made within the period of cover. The insured's claim on the insurer therefore had to identify when the demand was made. That being so, the claim could not properly be described without that temporal element. [41] Even if the fact that the third party made no demand on the insured within the period of cover were said to be an "omission" it is, nevertheless, of the first importance to recognise that the claim to which s 54 refers is the claim by the insured on the insurer that was actually made. It is not a claim for indemnity against some other demand (such, for example, as a demand assumed to have been made during the period of cover). Section 54 does not permit, let alone require, the reformulation of the claim which the insured has made. It operates to prevent an insurer relying on certain acts or omissions to refuse to pay that particular claim. In other words, the actual claim made by the insured is one of the premises from which consideration of the application of s 54 must proceed. The section does not operate to relieve the insured of restrictions or limitations that are inherent in that claim. [42] The restrictions that are inherent within a claim vary according to the type of insurance in issue. Under an "occurrence" based contract, no claim can be made under the contract unless the event insured against takes place during the period of cover. Under a "claims made and notified" policy, if no demand is made by a third party upon the insured during the period of insurance, any claim that may subsequently be made by the insured on the insurer (that is, the claim to which s 54 refers) would necessarily acknowledge that indemnity is sought in relation to a demand not of a type covered by the policy (because not within the temporal limits that identify those demands in relation to which indemnity must be given). [43] In the context of "discovery" contracts, containing clauses such as condition 3, the analysis is similar. If an insured "become[s] aware of any occurrence which may subsequently give rise to a claim" during the period of cover, an event of the type contemplated by the contract of insurance has occurred. Any subsequent claim would be for indemnity against a demand of a type covered by the contract." (Emphasis in original.) 1. Berkley submitted that [40]-[41] in Australian Hospital Care were binding authority that s 54 did not apply because no claim has been made by CIMIC on it. 2. We do not agree. The circumstances of Australian Hospital Care were that it had taken out a policy of insurance with FAI which provided that the insurer agreed to indemnify it against "any claim or claims for compensation first made…during the period of cover…for breach of professional duty…[or] by reason of any negligence…" (at [3]). The policy included a condition 3 which provided: "3. If during the subsistence hereof the Insured shall become aware of any occurrence which may subsequently give rise to a claim against him or them for breach of professional duty by reason of any negligence, whether by way of act, error or omission and shall during the subsistence hereof give written notice to the [insurer] of such occurrence, then any such claim which may subsequently be made against the Insured arising out of such negligence shall for the purposes of this Policy be deemed to have been made during the subsistence hereof." 1. A patient who had contracted septicaemia during his admission to one of Australian Hospital Care's hospitals gave notice, through his solicitor, that he was considering bringing a claim against the hospital. The hospital reasonably believed that the patient, having received an explanation, would not bring a claim. 2. After the expiry of Australian Hospital Care's insurance with FAI, it took out cover with a Lloyd's syndicate. During the period of the Lloyd's policy, Australian Hospital Care received a claim from the patient which it notified to both the Lloyd's syndicate and FAI. 3. The Lloyd's syndicate rejected the claim, partly on the basis of non-disclosure (a defence which was not pressed in the Queensland Court of Appeal: Australian Hospital Care Pty Ltd v Swinbank (Court of Appeal (Qld), 9 July 1999, unrep)) and on the basis of an exclusion in the Lloyd's policy. The Court of Appeal held that that exclusion was not engaged and hence found that the Lloyd's syndicate was liable for the costs which Australian Health Care incurred in litigating and settling the claim the patient made against it. 4. In a separate judgment given on the same day (FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (1999) 153 FLR 448), the Court of Appeal by majority also held that FAI was liable by reason of s 54 of the Insurance Contracts Act. This was because condition 3 of the policy was satisfied and (by majority) the failure of Australian Health Care to notify FAI of the existence of the "occurrence" within the meaning of condition 3 (of which it had become aware during the subsistence of the policy) was an omission within the meaning of s 54. 5. That conclusion was upheld in the High Court. But importantly, in the High Court the plurality said (at [17]): "[n]one of the questions of double insurance, which would seem to arise if FAI's appeal fails, were argued or now fall for decision." 6. The High Court did not express any view on whether an insurer against whom a claim was made could or could not recover contribution from an insurer against whom a claim was not made by asserting that the latter insurer would have been liable, if sued, through the operation of s 54. 7. Nor was that issue resolved in Antico v Heath Fielding Australia Pty Limited (1997) 188 CLR 652; [1997] HCA 35 ("Antico"), where the majority stated (at 669): "Section 54 does not postulate a liability of the insurer to pay a claim which has been made. Rather, it takes as its starting point the existence of a claim and a contract the effect of which is that the insurer may refuse to pay the claim. The section directs attention to the reason founding the refusal, namely a particular act or omission on the part "of the insured or of some other person"." 1. The point being made was that s 54 does not postulate an antecedent contractual liability to pay the claim. 2. In Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd (2016) 244 FCR 5; [2016] FCAFC 150 ("Pantaenius"), the Full Court of the Federal Court did not regard the High Court's decision in Australian Hospital Care as precluding a claim for contribution between the insurers. There the Lloyd's syndicate against whom a claim had not been made was found liable to contribute to the loss paid by the plaintiff insurer on the basis of s 54. In that case, the Lloyd's syndicate submitted that s 54 was only available for the benefit of the insured. The Full Court held: "[50] The appellant's argument was that s 54 was only for the benefit of the insured, and was not available to an insurer for the application of the principle of contribution. This argument was founded in significant respect in a textual fashion on the word "claim" in s 54 – that is, a claim by the insured. [51] If, however, s 54 were to be engaged for the benefit of the insured, the insurer would not be able to refuse to pay the claim. Subject to questions of prejudice (not relevant here) the insurance policy would respond, through its language, in the statutory context. [52] Contribution between insurers is founded in equitable principle as explained in Albion Insurance Company Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 352. It is the existence of co-ordinate liabilities of two parties that gives the right of contribution. The payment under one policy relieves the other policy of what would be a liability were a claim to be made on it. There is no requirement for a right of contribution to arise for the creditor to make a claim on both parties co-ordinately liable. The creditor can choose one; and that one has a claim in contribution against the other. Natural justice and equality underpin the right. So, no overly technical approach should be taken. The separate obligations may have different sources (here contract, and contract modified in operation by statute). The question is whether the obligations can be characterised as of the same nature and to the same extent: see HIH Claims Support Ltd v Insurance Australia Limited (2011) 244 CLR 62 at [39]. [53] Here the obligations of the two insurers should be characterised in nature, extent and function as the same. By way of example, could there be any doubt that contribution would lie between two insurers, to both of whose policies s 54 applied in circumstances where neither policy in its strict terms responded and the insured made a claim on one, but not the other, policy?" (Emphasis in original.) 1. Berkley did not submit that the decision in Pantaenius was clearly wrong and should not be followed, although Mr Walker SC who appeared for Berkley stressed that this Court is bound to follow what the plurality said in Australian Hospital Care. That is so, but for the reasons above, we do not read the statements in Australian Hospital Care at [40]-[41] that s 54 directs attention to the claim "in fact made" or "actually made" as precluding consideration of the effect of s 54 on the contractual liability of an insurer against whom no claim has been made, but who would have been liable had a claim been made, in proceedings for contribution brought by another insurer. 2. In Australian Hospital Care at [42]-[43] the plurality emphasised that whether s 54 applied had to be considered having regard to the inherent "restrictions and limitations" on a claim that the insured was entitled to make. That in turn depended upon the "essential character" of the insurance. 3. That concept was closely analysed by Meagher JA in Prepaid v Atradius: "[130] The effect of the contract of insurance must be determined as a matter of construction, unconstrained by distinctions between provisions which define the scope of cover and conditions or exclusions which affect the entitlement of an insured to claim. It is not controversial that s 54 is concerned with the effect of the contract as a matter of substance: East End Real Estate Pty Ltd v CE Heath Casualty & General Insurance Ltd (1991) 25 NSWLR 400 at 403-404 (Gleeson CJ), cited with approval in Antico at 660, 668-669 and Australian Hospital Care at [35], [50]. It is necessary to consider the effect of the contract in the way in which it responds to the claim actually made by the insured. It is at this point that difficulties may arise in applying s 54(1) in circumstances where it is said by the insured that the act or omission is the reason why the insured's claim is not with respect to a risk or event covered by the policy. … [133] The respects in which the insured's claim does not have the characteristics of the event of the kind insured are referred to by the plurality in Australian Hospital Care as "restrictions or limitations" inherent in that claim. Section 54 does not "relieve" the insured of those restrictions or limitations: [41]. The plurality (at [41], [42]) describe that event as "the event insured against" and as "an event of the type contemplated by the contract" and note that it will vary according to "the type of insurance in issue". [134] That event may be an accident which results in personal injury or property damage; or the happening of that injury or damage; or the making of a demand against the insured by a third party; or the happening of an occurrence or circumstance which may give rise to such a demand; or the insured's becoming aware of such an occurrence or circumstance. These descriptions of themselves are not sufficiently specific to define the event covered by a particular type of policy. The accident will have to be of a particular kind, or arise out of or in the course of a specified activity. The injury or damage will usually have to happen in the course of or in connection with a particular activity. The third party demand is usually described as arising out of or in connection with the conduct of a particular business or professional activity. The same may be said of an occurrence or circumstance which may give rise to a claim. [135] The way in which the provisions of the policy describe and define that event or risk will vary between different types of policy, and sometimes between policies which provide the same type of cover. It is here that matters of form are not to dictate the outcome when considering the effect of the contract: East End at 403-404. It nevertheless remains necessary, in addressing that effect, to have regard to the nature of the risk and subject matter insured as well as the commercial or other context in which the insurance is written, to the extent that evidence of that kind is admissible on that question of construction. [136] In Australian Hospital Care, the significant point of difference between the plurality and Gleeson CJ was in the characterisation of the effect of the contract and the identification of the event insured. Gleeson CJ considered that the effect of the contract was to indemnify against third party claims made, or potential claims notified, during the policy period: [11]. The plurality considered that the effect of the contract, particularly by reason of condition 3, was to indemnify against any claim, or occurrence likely to give rise to a claim, of which the insured became aware during the policy period, and irrespective of whether that occurrence was notified during that period: [23], [43]. Kirby J also considered that to be the effect of the contract: [59], [60]. The actual claim made by the insured was for an indemnity against liability for an occurrence of which the insured first became aware during the period of cover. If the effect of the contract was as Gleeson CJ considered it to be, the claim made by the insured did not involve an insured event because no third party claim had been made or potential claim notified during the policy period. The reason for refusal of the insured's claim would not have been an act or omission of the insured and s 54(1) would not have applied. The effect of the contract as characterised by the plurality led to the opposite conclusion: [46]." 1. Meagher JA's analysis was approved and adopted by the Full Federal Court in Pantaenius (at [38]). Their Honours added: "[40] These paragraphs lead to our additional comment to the analysis of Meagher JA in Prepaid. The process of understanding what are the restrictions or limitations that are inherent in the claim is one that involves the construction of the policy, not merely as to what its constituent words mean, but in a broad sense so as to characterise as a matter of substance what is the essential character of the policy. Once that essential character is decided upon, the restrictions or limitations that necessarily inhere in any claim under such a policy (to which s 54 does not apply) and the restrictions or limitations that do not necessarily inhere in any claim under such a policy (to which s 54 may apply) can be ascertained." 1. In Maxwell v Highway Hauliers Pty Ltd (2014) 252 CLR 590; [2014] HCA 33, the policy for the operator of an interstate freight transport business provided that no indemnity was provided unless the vehicle was being operated by a driver who had a prescribed score in a psychological test approved by the insurers. No such test had been taken by the drivers of the vehicles which were involved in accidents from which the claim arose. The High Court held that s 54(1) applied to the insured's omission to have the drivers take the requisite test. The High Court said: "[23] The Insurers sought support for their argument from a statement of the plurality in FAI that the section "does not operate to relieve the insured of restrictions or limitations that are inherent in [the] claim" ((2001) 204 CLR 641 at 659 [41]). They misapply that statement in equating its reference to restrictions or limitations that are inherent in a claim with any restriction or limitation on the scope of the cover that is provided under the contract. A restriction or limitation that is inherent in the claim which an insured has in fact made, in the sense in which the plurality in FAI used that terminology, is a restriction or limitation which must necessarily be acknowledged in the making of a claim, having regard to the type of insurance contract under which that claim is made. [24] Thus, as explained in FAI, the making of a claim under a "claims made and notified" contract necessarily acknowledges that the indemnity sought can only be in relation to a demand made on the insured by a third party during the period of cover ((2001) 204 CLR 641 at 659 [42]). The section does not operate to permit indemnity to be sought in relation to a demand which the third party omitted to make on the insured during the period of cover but made after that period expired. Similarly, the making of a claim under a "discovery" contract, of the type in issue in FAI itself, necessarily acknowledges that the indemnity sought can only be in relation to an occurrence of which the insured became aware during the period of cover ((2001) 204 CLR 641 at 659 [43])." 1. If the relevant omission of Leighton for the purposes of s 54 is not disclosing the circumstances of the Iraq File Note, it should be taken not as being an omission to notify the claim in 2012 when the claim was notified to the 2011 Insurers, but as an omission to notify the claim during the currency of the 2010 Policy when it became aware of the circumstances which could give rise to a Claim. 2. Condition 3 of the FAI policy (quoted at [457]) referred to the insured becoming aware, during the subsistence of the policy, of an occurrence which might subsequently give rise to a claim. Clause 5.1 refers to the Insured's notifying the Insurer, during the Policy Period, of any circumstance reasonably expected to give rise to a claim and giving reasons and particulars. 3. Although there are significant differences between condition 3 of the policy in FAI and cll 5.1 and 5.4 of the 2010 and 2011 Policies in this case, cll 5.1 and 5.4 are a type of "discovery" contract to which the above observations in Maxwell v Highway Hauliers Pty Ltd apply. 4. In Australian Hospital Care it was the omission to notify the occurrence during the period of cover that attracted the operation of s 54. In Antico the High Court said (at 669) that: "…there is no reason why the omission of the insured may not be a failure to exercise a right, choice or liberty which the insured enjoys under the contract of insurance." 1. Leighton could (arguably) have notified the circumstances of the Iraq File Note under Berkley's 2010 Third Excess Policy and, if so, s 54 could apply to render it liable. But its only entitlement to do so under the 2010 Policy was during the period of the policy or the later discovery period (which is not relevant). 2. If Leighton had made a claim on Berkley during the period of the 2010 Policy, there could have been no mutuality of obligation between Berkley and AIG. Hence, Berkley submitted that the primary judge erred by not identifying the "insuring clause event". It submitted that there was no double insurance in the 2010 Policy period because the AIG policy had not incepted, nor in the 2011 Policy period because the temporal limits of the 2010 Policy had passed. 3. That is true so far as it goes. But if s 54 is engaged such that Berkley could not refuse to pay a claim by reason of Leighton's omission to notify circumstances it reasonably expected to give rise to a claim, then the principles of contribution between insurers where there is double insurance apply. Both policies would cover the same loss: Albion Insurance Co Ltd quoted at [450] above. 4. AIG pleaded: "28. During the Policy Period applicable to the 2010 Policies, from about 23 November 2010 to 30 June 2011, it was reasonable for CIMIC to expect that a Claim would arise from the Iraq File Note or the facts, matters and circumstances recorded in the Iraq File Note." 1. AIG did not plead that Leighton in fact expected that a claim would arise from the facts, matters and circumstances recorded in the Iraq File Note. 2. There is a difference between having a reasonable expectation and its being reasonable to have an expectation. 3. Neither the case pleaded by AIG against Berkley nor the findings of the primary judge establish that Leighton, through its relevant officers, had an expectation that the circumstances referred to in the Iraq File Note would give rise to a claim. This is so notwithstanding the terms of the declaration in Order 13 (see at [423] above). In its application to circumstances reasonably expected to give rise to a claim, cl 5.1 was materially narrower than condition 3 of the FAI policy considered in Australian Hospital Care. 4. Condition 3 of the policy considered in Australian Hospital Care permitted the giving of notice of circumstances of which the insured was aware, which might give rise to a claim. If the notice was given, the policy would respond to a later claim. The insured was aware of such circumstances. The clause was engaged although the insured did not expect a claim to be brought. The omission to give notice of such circumstances attracted s 54. 5. By contrast, cl 5.1 permitted Leighton to give notice of "…any circumstances reasonably expected to give rise to a Claim". The notice had to include reasons for anticipating "that" Claim with full particulars. If notice of such circumstances were given, cl 5.4 provided that a later Claim arising from the circumstances notified would be covered by the same policy. 6. The declaration made by Order 13 was that the circumstances of which Leighton was aware were reasonably expected to give rise to a Claim, and could have been notified under the 2010 Policies (see [423]). 7. The primary judge did not give reasons for that conclusion. 8. In its NOC filed in the Berkley Appeal, CIMIC contended that the primary judge's findings at J[318(3)] and [326(4)] amounted to a finding that it had the subjective state of mind required by cl 5.1 of the 2010 Policies that Berkley asserted was required. 9. The primary judge there found: "[318] … (3) Mr Stewart and Mr Wild did not believe that Mr King had approved overpayments to win the Phase 1 Contract. Even so, the fact that Mr Savage was a COO of LIL and was, to Mr Stewart and Mr Wild's knowledge, instrumental in projects that were causing Leighton serious ethical issues into 2011, meant that Mr Savage's statements proposing these payments was something significant for the business and, as Mr Stewart accepted, if true, could have negative consequences for Leighton. … [326] … (4) Mr Stewart actually considered the seriousness of what was being communicated because he compared what he was told with the AWB, and he knew that, if Mr Savage was telling the truth, it could lead to claims against the company." 1. Clause 5.1 does not refer to the Insured's expectation of a possible Claim or a Claim that might be made against it. A Claim is relevantly defined in cl 4.5(i) as a written demand, or civil regulatory or administrative proceeding seeking compensation or other legal remedy made or brought against an Insured alleging a Wrongful Act. In other words, there is nothing in the definition of Claim which encompasses possible claims. For cl 5.1 to be engaged there must be an actual expectation (reasonably held) that the circumstances notified would give rise to a claim. The reasons for anticipating "that Claim" with full relevant particulars must be provided. 2. The primary judge's findings fell short of a finding that Leighton expected that a Claim would be made arising from the circumstances in the Iraq File Note. 3. A reasonable person in the position of Leighton's executives could have had such an expectation. But their failure to form that expectation was not a relevant omission (and was not alleged to be a relevant omission) for the purposes of s 54. 4. In the context of cl 5.1 it is the forming of a reasonable expectation of a claim and not merely becoming aware of circumstances that could give rise to a claim that is a "restriction or limitation" inherent in the claim that could be made. An omission to form an expectation that a claim would arise from the circumstances of the Iraq File Note is not a relevant omission for which relief is available under s 54. 5. For these reasons the primary judge erred in ordering contribution from Berkley in respect of AIG's liability for the Investigation Costs. 6. For completeness, it might also be noted that the wording of Issue 11 did not capture ground 7 of Berkley's NOA concerning the correctness of the primary judge's rejection of its limitation defence. We consider, however, that it is unnecessary to determine this ground given Berkley's success in relation to other issues, including Issue 11. Issue 12: Did the primary judge err in making the declaration against the 2010 Insurers based on the pleadings against them? Issue 13: Did the primary judge err in making the declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact? Issue 15: Did the primary judge err in making the declaration against the 2010 Insurers on the grounds that the declaration was hypothetical, lacked utility "including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late to do so", was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy? Some background matters 1. These three issues are related and it is convenient to address them together. They raise questions concerning the Court's jurisdiction to grant the declaration in Order 13. Alternatively, if that jurisdiction existed, did the Court's discretion miscarry? 2. Before addressing those questions, it is desirable to reiterate some relevant background matters. In the alternative to its principal case against the 2011 Insurers concerning indemnity for the Company Securities Claims under the 2011 Policy, CIMIC sought declaratory relief against some of the 2010 Insurers (namely Berkley, Zurich, Swiss Re, Chubb, Arch and Dual) based on several excess policies with those particular 2010 Insurers between 30 June 2010 and 30 June 2011. 3. CIMIC's case below presented it with a pleading dilemma. Its primary case, which was directed to the 2011 Insurers, was that it did not have to give them any pre-inception notice in respect of the Iraq File Note because it did not have the requisite state of mind or awareness so as to trigger any disclosure or notification obligation before entering into the 2011 Policies. The dilemma which confronted CIMIC was the possibility that this primary case might fail. Accordingly, in recognition of that possibility and to guard against the risk of an inconsistent finding by another Court of CIMIC's state of awareness (more correctly, Leighton's state of awareness (see [4] above), but in this section it is convenient to continue to refer to "CIMIC" alone) during the period of the 2010 Policies, CIMIC ran an alternative case against the 2010 Insurers. It sought declaratory relief against them to the effect that it remained open to CIMIC to notify the 2010 Insurers of circumstances relating to the Iraq File Note. CIMIC's alternative claim was limited to declaratory relief because a full claim for indemnity against the 2010 Insurers may have triggered an exclusion in cl 3.2 of the 2011 Policies regarding prior claims and circumstances. 4. The dilemma was compounded by the fact that, until the primary judge made relevant findings of fact and determined the question of CIMIC's state of mind during the period of the 2011 Policies, CIMIC considered that it could not meaningfully plead the relevant facts which supported the opposite and alternative case which it wanted to run against the 2010 Insurers if it failed in its case against the 2011 Insurers. 5. As will be developed, this fundamental dilemma was seized upon by the 2010 Insurers below in opposing the declaratory relief sought by CIMIC against them. It also provides a major plank to their appeal against the form of the declaratory relief which was ultimately made below. 6. CIMIC did not make claims against 2010 Insurers and sue them for monetary relief in the alternative to its claims against the 2011 Insurers. 7. Before addressing the grounds of appeal, it is desirable to describe in a little more detail how these issues were raised in the conduct of the trial, then summarise the primary judge's reasons for ultimately granting declaratory relief in the form of Order 13 dated 12 October 2022 (above at [423]). The proceedings below concerning CIMIC's alternative case against the 2010 Insurers 1. As noted above at [12], the relief initially sought by CIMIC against the 2010 Insurers, as set out in CIMIC's further amended summons and at J[612], was relevantly as follows: "…declarations that CIMIC remains entitled, in reliance upon section 54(1) of the Insurance Contracts Act and the 'Notification' and 'Deeming' clauses incorporated into each of the following Policies, to notify circumstances, being the existence and contents of a handwritten document (the Iraq File Note) created by a former co-chief operating officer and former CEO of CIMIC, David Stewart (Stewart) appearing (on its face) to be dated 23 November 2010: [The relevant 2010 Policies were identified]". (Emphasis in original.) 1. The references to the "Notification" and "Deeming" clauses are to cll 5.1 and 5.4 respectively of the 2010 Policies (the terms of which are set out at [20] above). As is apparent from our consideration of Issue 11, the reference in the original form of CIMIC's declaration to s 54(1) of the Insurance Contracts Act is a reference to a statutory provision which modifies the effect of contractual rights to enable a contractual claim to be made, by denying a contractual basis for refusal to pay and substituting statutory rights based on proportionality: see National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543 at [95] (Allsop CJ) ("Nautilus"). 2. The allegations supporting CIMIC's original declaration were contained in [187]-[190] of CIMIC's further amended commercial list statement ("FACLS") (omitting a portion of [187] which was not pressed at trial and noting the express reference at the end of [187] to s 54 of the Insurance Contracts Act): "[187] In the alternative to paragraphs 160 – 186 above, if (as is variously alleged by [the 2011 Insurers] and denied by CIMIC) the Court finds that the AFP Investigation Costs, the ASIC Investigation Costs, the MCI Class Action Defence Costs, the Inabu Class Action Defence Costs, CIMIC's liability to pay the Inabu Settlement Amount and/or the Gregg Prosecution Costs arose from 'circumstances that could and should have been notified' under the 2010 Policies…then (and for the purposes of the claim pleaded at this paragraph 187 and in paragraphs 188 – 190 below only), CIMIC says that it remains entitled to give notice of the circumstances referred to in the Iraq File Note and the fact of its creation to each of [the 2010 Insurers] in their capacity as the Insurers for the Third, Fourth, Fifth and Sixth 2010 Excess Policies, in accordance with the 2010 Notification Clause and the 2010 Deeming Clause (including as those terms were incorporated into each of those Policies) and s. 54(1) of the Insurance Contracts Act. [188] On or about 27 August 2019, CIMIC sought confirmation from each of [the 2010 Insurers], in their capacity as the Insurers for the Third, Fourth, Fifth and Sixth 2010 Excess Policies respectively, that they accepted that in the event that a Court finds (as is alleged by [the 2011 Insurers], and which is denied by CIMIC) that the AFP Investigation Costs, the ASIC Investigation Costs, the MCI Class Action Defence Costs, the Inabu Class Action Defence Costs and/or CIMIC's liability to pay the Inabu Settlement Amount arose from 'circumstances that could and should have been notified' under the 2010 Policies, then it must follow that CIMIC remains entitled to give notice of the existence and contents of the Iraq File Note to each of them in their capacity as the Insurers for the Third, Fourth, Fifth and Sixth 2010 Excess Policies respectively, in reliance upon the 2010 Notification Clause and the 2010 Deeming Clause (including as those terms were incorporated into each of those Policies) and s. 54(1) of the Insurance Contracts Act. Particulars (1) Email from Allens to JLT dated 27 August 2019. (2) Letter from Allens to JLT dated 27 August 2019. (3) Email from JLT to Allens dated 27 August 2019. [189] Each of [the 2010 Insurers] have failed to provide the confirmation referred to in paragraph 188 above. [190] In the premises CIMIC is entitled to the relief claimed against [the 2010 Insurers] in the Summons in respect of the Third, Fourth, Fifth and Sixth 2010 Excess Policies respectively." 1. The declaration originally sought is set out at [502] above. 2. Both before and during the course of the trial, several of the 2010 Insurers complained about the form of the declaration sought against them and the alleged inadequacy of pleaded matters supporting it. For example, both Zurich and Swiss Re pointed out in their opening written submissions below that, contrary to the proposition which was implicit in the terms of the declaration initially sought by CIMIC, s 54 did not provide a mechanism for CIMIC to notify circumstances out of time. Rather, s 54 operated so as to permit the Court to excuse a failure to make a timely notification and allow the insured to recover indemnification subject to any prejudice to an insurer: citing Australian Hospital Care at [40]-[46] (McHugh, Gummow and Hayne JJ). 3. Berkley complained that it did not understand the case it had to meet. It contended that CIMIC had made an election to give primacy to its case against the 2011 Insurers, which was predicated on a contradictory basis to its alternative case against the 2010 Insurers. In pre-trial correspondence, Berkley's lawyers complained to CIMIC's lawyers that no material facts had been identified in support of the alternative relief sought against it. And in separate correspondence with AIG's lawyers regarding its cross-claim against Berkley, Berkley's lawyers complained it was oppressive for it to "trawl through" thousands of pages of documents in an endeavour to identify "an undisclosed and unparticularised" cause of action: at J[574]. 4. As the primary judge noted at J[565], some of the 2010 Insurers also contended that the declaratory relief was hypothetical and should not be made in the Court's discretion. A limitation defence was also raised. Finally, in the case of Arch/Dual, they opposed declaratory relief being granted against them on the basis that the Losses incurred would not reach their layer of insurance unless the Gregg Prosecution Costs were payable by the 2010 Insurers, which they denied. 5. After the 2010 Insurers objected to the terms of the initial declaration, CIMIC foreshadowed in pre-trial correspondence that, in addition to the initially-worded declaration, it would seek an alternative declaration. In its closing written submissions dated 3 June 2022, CIMIC proposed the following alternative declaration (note the omission of any express reference to s 54 of the Insurance Contracts Act), as set out at J[613]: "In the alternative, a declaration, as against each of the sixth to tenth defendants, that, in the events which have happened, the plaintiff was, during the period 30 June 2010 to 30 June 2011, aware of circumstances reasonably expected to give rise to a Claim within the meaning of cl 5.1 of the excess policy entered into by that defendant for that period." 1. Below, the 2010 Insurers also challenged this differently worded declaration. They complained about the lack of specificity in the expression "in the events which have happened". They also complained that the reformulated declaration was only notified to them after CIMIC's witnesses had given evidence between 20 and 25 May 2022. 2. In its closing submissions below, Zurich contended that CIMIC's pleadings were fundamentally flawed and that, given those flaws, Zurich was not required to meet any factual case that could support the declaratory relief sought against it. 3. Berkley also complained about the lack of specificity in the expression "the events that have happened". As discussed above, it also complained of procedural unfairness (which we will address later in these reasons). 4. The primary judge explained at J[635]-[637] why she would not make a declaration in the terms of the initial declaration sought by CIMIC. Her Honour then explained at J[638]-[648] why the alternative declaration should not be made in the terms sought by CIMIC, but proceeded to explain why she considered that it was appropriate to grant some form of declaratory relief (see further at [531]-[542] below). 5. After being given an opportunity to agree on the terms of a different form of declaratory relief, the parties were unable to reach a consensus. Thus, after considering the matter, on 12 October 2022 (and without publishing any further reasons for judgment which explain why Order 13 was expressed as it was) Order 13 was made by the primary judge in the terms set out at [423] above. 6. Order 13 as finally made contains cross-references to J[58] and [318]. The terms of the Iraq File Note are set out at J[58] (see [90] above). J[318] is an important paragraph in the primary judgment because it sets out her Honour's findings relating to Messrs Stewart and Wild's knowledge and belief concerning the matters recorded in the Iraq File Note. Those findings provided an essential foundation for Order 13. The factual findings in J[318] are set out at [131] above. Consideration and determination of challenges concerning Order 13 Federal jurisdiction 1. There was no explicit recognition in the proceedings below (possibly because the issue was simply assumed) that federal jurisdiction was being exercised. This may not be unimportant given the overlap between some of the relevant principles concerning what is a "matter" for the purposes of federal jurisdiction and the need for there to be a controversy for declaratory relief to issue. This highlights the difference between the concepts of "federal jurisdiction" and "jurisdiction" to grant declaratory relief. As the plurality said in Unions NSW v New South Wales [2023] HCA 4; (2023) 97 ALJR 150 at [13] ("Unions NSW"): "The judicial power of the Commonwealth is vested by s 71 of the Constitution in the High Court, and such other federal courts as the Parliament creates or vests with federal jurisdiction. "Jurisdiction" is the "generic term" for the authority to adjudicate. Federal jurisdiction is the authority to adjudicate – the authority to exercise the judicial power of the Commonwealth – derived from the Constitution and laws passed by the Commonwealth Parliament under the Constitution. The extent of this Court's authority to exercise that power (and the authority of other courts invested with federal jurisdiction) is limited by the Constitution, reflecting notions of the separation of powers, and of responsible and representative government, found in the text and structure of the Constitution." (Footnotes omitted.) 1. We will briefly explain why federal jurisdiction was being exercised. Section 39(2) of the Judiciary Act 1903 (Cth) vests the Supreme Court with federal jurisdiction "in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon [the High Court]" (apart from various exceptions which do not arise). Under s 76(ii) of the Constitution, the matters in respect of which jurisdiction may be conferred upon the High Court include "any matter…arising under any laws made by the Parliament". 2. It is made clear in the FACLS that one of the issues which was likely to arise in the proceedings was whether, in the alternative, relevant circumstances "could or should have been notified" under the 2010 Policies such that CIMIC remained entitled to notify those circumstances under cll 5.1 and 5.4 and s 54 of the Insurance Contracts Act (see [2] of Pt B of the FACLS). Moreover, it was expressly stated in the FACLS that CIMIC claimed interest against AIG, Chubb, Catlin and Liberty under s 57 of the Insurance Contracts Act. Finally, in [6A] of the further amended summons, CIMIC sought interest under s 57 against Chubb in respect of its claim against it under the 2013 Primary Policy. 3. In their various commercial list responses below, the defendants raised several other provisions of the Insurance Contracts Act. For example, in its amended commercial list response filed on 18 February 2022, AIG relied on s 21 in claiming that CIMIC breached its duty of disclosure in not disclosing the Iraq File Note. AIG also claimed that CIMIC made a false or misleading representation for the purposes of s 28 in claiming that it was not aware of any facts which might give rise to a claim, apart from the facts set out in Appendix "C" to the 2011 Proposal Form. 4. The express references to and substantive reliance upon these Commonwealth statutory provisions in the pleadings raise the question whether the proceedings involved a "matter" arising under the Insurance Contracts Act which enlivened the exercise of federal jurisdiction. 5. It is well settled that a distinction must be drawn between the width of the conception of a "matter" as denoting a controversy or dispute and the proceeding in which the controversy may be resolved. See Fencott v Muller (1983) 152 CLR 570 at 603; [1983] HCA 12. 6. It is also well settled that once federal jurisdiction is engaged in relation to a matter, that jurisdiction extends to resolving not merely that part of the matter that has attracted federal jurisdiction but to the whole of the matter: see Nautilus at [81]. That principle applies to the present proceedings. In determining whether or not there is a "matter" which attracts federal jurisdiction, the focus should be on the whole controversy and not simply one part of it, such as the dispute relating to the meaning and operation of the clauses in the 2010 Policies regarding notification. 7. The following observations of the plurality in CGU Insurance Limited v Blakeley (2016) 259 CLR 339; [2016] HCA 2 at [26] ("CGU v Blakeley") are also important: "It is a necessary condition of federal jurisdiction, in the sense of authority to exercise the judicial power of the Commonwealth, that the matter in which the jurisdiction of the court is invoked is "capable of judicial determination" or "justiciable". That concept of justiciability does not embrace a purely advisory opinion. In holding invalid Commonwealth legislation purporting to confer an advisory jurisdiction this Court in In re Judiciary and Navigation Acts said that: "there can be no matter within the meaning of [s 76] unless there is some immediate right, duty or liability to be established by the determination of the Court." …". (Footnotes omitted.) 1. Furthermore, the plurality at [28] said that the "use of the constitutional term "matter" in the statutory investing of Supreme Courts with general and specific federal jurisdiction directs attention" to the following observations of Latham CJ in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154; [1945] HCA 50: "a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law." 1. More recently, in both Hobart International Airport Pty Ltd v Clarence City Council (2022) 276 CLR 519; [2022] HCA 5 at [26] ("Hobart International Airport"), and AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26; (2023) 97 ALJR 674 at [31] ("AZC20"), "matter" was said to have the following two elements: 1. the subject matter itself as defined by reference to the heads of jurisdiction in Ch III of the Constitution; and 2. the concrete or adequate adversarial nature of the dispute sufficient to give rise to a justiciable controversy. 1. Applying these principles, it is plain that the dispute between the parties here covered a broad range of issues concerning the meaning and effect of multiple clauses in the 2010 and 2011 Policies as well as reliance upon several provisions in the Insurance Contracts Act. That the subject matter was sufficient to engage s 39(2) of the Judiciary Act, when read together with s 76(ii) of the Constitution, is because the reliance upon the statutory provisions in the Insurance Contracts Act involved a matter arising under a law made by the Parliament. 2. As noted above, s 54 of the Insurance Contracts Act was explicitly referred to in the form of the declaration as initially sought by CIMIC, but the reference was then removed in the alternative declaration. But this does not mean that the whole matter ceased to be in federal jurisdiction. As noted above, other claims relating to other provisions of the Insurance Contracts Act remained. In any event, even if the deletion of the explicit reliance on s 54 is looked at in isolation from those other statutory provisions, federal jurisdiction would still remain. As Allsop J held in Macteldir Pty Limited v Dimovski [2005] FCA 1528 at [36] (citing, inter alia, Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 218-219): "…It is a fundamental tenet of federal jurisdiction that once a federal claim is made, even a bad one, and even one that is abandoned, or struck out, the whole matter in which that claim is made is, and remains, federal jurisdiction". 1. Coincidentally, ss 54 and 57 of the Insurance Contracts Act were also raised in Nautilus (see at [91]-[92], [95]-[96]) and provided part of the foundation for Allsop CJ's conclusion there that that case involved federal jurisdiction arising under s 76(ii) of the Constitution. 2. As to the second essential element of "matter", which requires the existence of a justiciable controversy, it is plain from the exchange of pre-litigation correspondence referred to in the FACLS (see, for example, the particulars given in [168], [175], [181], [187] and [188] of the FACLS), that CIMIC and the various 2010 and 2011 Insurers were in strong dispute on several issues relating to the construction and operation of various clauses in the 2010 and 2011 Policies, including but not limited to cll 5.1 and 5.4 of the 2010 Policies and cll 3.2, 5.1, 5.3 and 5.4 of the 2011 Policies. This correspondence confirms that there was a large and complex controversy concerning the liability of the 2011 Insurers to indemnify CIMIC under the 2011 Policies, as well as concerning the question of whether notification could and/or should have been given under the 2010 Policies. The terms of the individual 2010 and 2011 Policies were substantially similar, as was the substratum of facts underlying the parties' controversy. As was the case in Nautilus (albeit in different circumstances), the pre-litigation correspondence referred to above identified a very real and substantial controversy independent of the proceedings which were subsequently commenced. 3. Accordingly, the Court was and is exercising federal jurisdiction under s 39(2) of the Judiciary Act (no party suggested that this Court lacked jurisdiction to determine the appeals because of the reasoning of the majority in AZC20). The primary judge's reasons in support of granting a form of the alternative declaration sought by CIMIC 1. The primary judge gave detailed reasons as to why she rejected the multiple objections raised by the 2010 Insurers to the making of a form of the alternative declaration (not all those objections are raised on appeal). Her Honour's reasoning and conclusions relied in large measure upon her earlier analysis at J[624]-[634] of various authorities which establish principles concerning the Court's power to grant declaratory relief. In brief, the primary judge extracted the following principles from the case law. 2. First, the Court's statutory power to grant declaratory relief (which is conferred by s 75 of the Supreme Court Act 1970 (NSW)) (as opposed to its inherent jurisdiction) involved a "largely unfettered (but not unlimited) discretion", citing Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582; [1992] HCA 10 ("Ainsworth") and Hobart International Airport at [32]. 3. Second, no single principle is necessarily determinative for a declaration to be made (citing Young JA's observation in Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222 at [132]) and "special facts in a particular case may mean that the discretion is exercised otherwise than in accordance with "principle"." 4. Third, declaratory relief should not be granted where it will produce no foreseeable consequences for the parties, citing Ainsworth at 582, or where the relief will be divorced from the facts and be theoretical and hypothetical, citing Bass at 356-357 and Palmer v Ayres (2017) 259 CLR 478 at 491; [2017] HCA 5 (Kiefel, Keane, Nettle and Gordon JJ). 5. Fourth, the primary judge implicitly agreed with CIMIC's submission that various authorities supported its claim that some form of declaratory relief was appropriate because it had a real commercial interest in establishing the existence of a state of affairs (i.e., CIMIC's state of mind during the period of the 2010 Policies) which would inform its proposed commercial conduct and quell a justiciable controversy. 6. It is desirable to set out the following passages from those authorities which address the issue of hypotheticality: 1. On the issue of foreseeable consequences extending to arming parties with knowledge of the correct legal position for future negotiations so as to justify the grant of declaratory relief, the primary judge referred to the following passage in Edwards v Santos Limited (2011) 242 CLR 421; [2011] HCA 8 at [37] per Heydon J (with whom French CJ, Gummow, Crennan, Kiefel and Bell JJ agreed) ("Santos"): "The questions which the plaintiffs wished to agitate were not hypothetical. The first defendant's letter…had sufficiently indicated the intention of the petroleum defendants to make an application to the Minister…and it had predicted that success would be "automatic". If so, the plaintiffs would be seriously disadvantaged because their negotiating position would be gravely weakened; if not, the plaintiffs would be correspondingly better off. If the plaintiffs obtained the first declaration sought, it would produce foreseeable consequences for the plaintiffs and the petroleum defendants by allowing them to continue the process of negotiating…armed with knowledge of the correct legal position…". 1. Her Honour also referred to Nettle J's observations in CGU v Blakeley at [102]: "… the issue in this case is not theoretical but, even if it were, the court does not lack jurisdiction to make a declaration concerning a theoretical issue, in the sense of an issue that does not presently exist but which is likely to arise in future, where the issue is productive of a real and pressing dispute, is of real practical importance or is one in which the claimant has a real commercial interest. Thus, for example, it is now well established that, where a claimant intends to take action which would subject him or her to a "theoretical" possibility of being subjected to legal process, the risk of being so subjected to that process is sufficient to ground standing to claim a declaration that the basis of the process…is invalid and, co-ordinately, that in such cases there is a matter upon which the court has jurisdiction to adjudicate. Similarly, where a claimant has a real commercial interest in establishing the claimant's legal status or entitlement in relation to proposed commercial conduct and there is a real controversy with some contradictor as to the existence or extent of the claimant's legal status or entitlement, the claimant may have standing to obtain, and the court co-ordinately will have jurisdiction to grant, a declaration as to the existence or extent of the status or entitlement." (Footnotes omitted.) 1. The following passages from Allsop CJ's judgment in Nautilus were also cited in support of granting declaratory relief: "[106] …foreseeable consequences are to be assessed by the place of the declaration in the controversy that otherwise exists or existed, and the practical and real effect that it may have on the controversy or the consequences of the controversy. In Ainsworth it was that there may be amelioration of reputational harm. In Edwards v Santos it was establishing a legal certainty in the operation of the legislation which was relevant to the respective bargaining positions of the parties in a wider controversy. … [110] It is difficult to see what is advisory or hypothetical about declaring the meaning of a contract in circumstances where there is no dispute about the terms of the contract, where the relevance of any surrounding circumstances can be debated and found, where the parties are in precise and clearly articulated disagreement as to the meaning of or part of the contract, and where the proper construction of that part is clearly a part, indeed an important part, of an overall controversy about one party's asserted and disputed entitlement to be indemnified under the whole of the contract. … [115] …The question is whether the resolution of a disputed question of construction…has foreseeable consequences, including practical consequences. The answer is not dissimilar to the answer in Edwards v Santos – the parties will have the correct legal foundation for the resolution or negotiation of a settlement of the claim." 1. Fifth, her Honour explained at J[631]-[634] why she viewed as distinguishable cases such as Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73, Galaxy Communications Pty Ltd v Paramount Films of Australia Inc [1998] NSWCA 89 and Brighton Ceiling Pty Ltd v Pocrnja [2005] NSWCA 175. This was on the basis that her Honour regarded the observations made in those cases as to the inappropriateness of granting declaratory relief on hypothetical matters as "fact-specific". 2. Sixth, her Honour explained at J[641]ff why she did not regard cases such as Ozmanian and Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 ("Trans Realties") as precluding a grant of declaratory relief. As to Kiefel J's obiter statement in Ozmanian at 33 that it will be a "rare case where a bare declaration would be seen to be justified", the primary judge considered that this statement was limited by its context, with particular regard to the fact that the declaration granted in Ozmanian related to an acknowledgment of the past infringement of a right to procedural fairness. The primary judge saw Ozmanian as not precluding the grant of declaratory relief in circumstances where practical consequences would flow from such relief. Those practical consequences were described by the primary judge at J[645] as being "prospective and affect CIMIC's conduct and performance and notification under the 2010 Policies and future negotiation and litigation." This language echoes what Heydon J said in Santos at [37], where his Honour concluded that the declaratory relief sought there was not hypothetical because, if granted, "it would produce foreseeable consequences for the plaintiffs and the petroleum defendants by allowing them to continue the process of negotiating…armed with knowledge of the correct legal position". 3. As to Trans Realties, where the purchaser of land sought a declaration that the vendor's notice of rescission was invalid, the primary judge described the form of declaration sought here as quite different because "a declaration as to [CIMIC's] state of mind during a relevant period that engages cl 5.1 is final and causes practical consequences": at J[646]. 4. Finally, the primary judge considered that the making of a form of the alternative declaration was also justified having regard to Lohar Corporation Pty Ltd v Dibu Pty Ltd (1975) 1 BPR 9177 ("Lohar Corp") where Hutley JA (with whom Street CJ agreed) drew a distinction between the making of a declaration on an ultimate or decisive fact on which the rights of the parties finally depended, as opposed to "subsidiary or collateral facts" which do not and cannot determine the parties' controversy. 5. At J[647], the primary judge set out the following passage from Hutley JA's reasons for judgment in Lohar Corp at 9179: "Declarations as to particular situations are appropriate where the declaration is as to an ultimate or decisive fact, upon which the rights of the parties finally depend. They are not appropriate as to subsidiary or collateral facts which, however interesting to the parties, do not decide the controversy between them, and cannot do so. There can be no objection to the trial of facts between the parties in segments according to their and the court's convenience, but that is not the same as seeking in the trial the determination of what are subsidiary issues." 1. After citing this passage, the primary judge explained at J[648] why she regarded a form of the alternative declaration as being appropriate to address an ultimate or decisive fact, as opposed to addressing a mere subsidiary issue: "Here the declaration is as to an ultimate or decisive fact, upon which the rights of the parties, in part, depend. While other matters are still necessary to be determined before it could be found that the 2010 Insurers are liable to indemnify CIMIC, I do not consider the subject matter of the Alternative Declaration a mere "subsidiary issue" in circumstances where the litigation involved debate about the question of awareness and the proper construction of cl 5.1." The challenges to Order 13 1. We now address the parties' primary challenges to her Honour's reasoning at J[638]-[648] in support of the form of declaratory relief which later appeared in Order 13. 2. For the following reasons, we consider that the primary judge erred in making Order 13. In our view, her Honour erred not so much in her identification of the relevant principles bearing upon the existence and exercise of jurisdiction or power to grant declaratory relief, but in the application of those principles to the particular circumstances of this case. In brief, we consider that the primary judge erred in proceeding on the basis that the Court had jurisdiction to make Order 13. In addition, and alternatively, even if jurisdiction existed, we consider that the exercise of the Court's discretion to grant declaratory relief miscarried. It is not necessary to decide whether appellate review in these circumstances is confined to House v The King errors (House v The King (1936) 55 CLR 499 at 504-505 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40). Assuming that the House v The King standard for appellate review is engaged, the miscarriage involved errors which can be described as taking into account irrelevant matters and/or failing to take into account material considerations within the meaning in House v The King. Jurisdiction to grant declaration in terms of Order 13 1. In oral address on the appeal, Mr Dick SC (who appeared for Zurich together with Mr S Fitzpatrick) confirmed that Zurich's challenge to Order 13 had two planks: namely that there was no jurisdiction or power to make a declaratory order in those terms and, alternatively, if power existed the exercise of the discretion to grant such relief miscarried. 2. Before explaining why both those contentions should be upheld, it is desirable to say something more about the concept of "jurisdiction", which has appropriately been described as a "slippery word" (see Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press) at 11). The word can bear various meanings, some of which were referred to by the plurality in CGU v Blakeley at [25]: "Other limits on "judicial power" are encompassed by such terms as "justiciability", "standing" and "incompatibility". "Jurisdiction" in the sense of authority to adjudicate and "judicial power" are different concepts. There is also a distinction to be made, discussed below, between jurisdiction and specific powers to grant particular remedies. Observations about such distinctions may be made with an acceptance that there are other usages of the term "jurisdiction" which are not material for present purposes and which it is not necessary to explore." (Footnotes omitted, emphasis added.) 1. The reference in that passage to the discussion below is a reference to [31]ff. At [31], the plurality said: "The existence of jurisdiction is anterior to the existence of the power to grant particular relief. As Gleeson CJ and McHugh J said in Minister for Immigration and Multicultural and Indigenous Affairs v B ((2004) 219 CLR 365 at 377 [6]): "In a legal context the primary meaning of jurisdiction is 'authority to decide'. It is to be distinguished from the powers that a court may use in the exercise of its jurisdiction". The distinction has been made frequently in this Court." (Footnotes omitted.) 1. In CGU v Blakeley, the liquidators of a company brought proceedings in the Supreme Court of Victoria against three former directors of the company, alleging breaches of the Corporations Act. The liquidators sought to join the insurer under a professional indemnity policy which had refused indemnity to one of the directors and another company, which the liquidators claimed was also a "director" within the extended statutory definition of that term in s 9 of the Corporations Act. The liquidators also sought leave to file and serve amended points of claim seeking a declaration that the insurer was liable to indemnify the director and the other company. The insurer opposed joinder, claiming that there was no justiciable controversy between it and the liquidators as no claim had been made against it by the former director or the other company. 2. The primary judge granted the application for joinder and permitted the liquidator to seek declaratory relief against the insurer. The Court of Appeal dismissed an appeal. 3. On further appeal to the High Court, the plurality pithily identified the central question at [1] as whether federal jurisdiction invested in the Supreme Court of Victoria authorised that Court to entertain the claim for a declaration sought by the plaintiff, which was to the effect that the insurer was liable to indemnify the defendant. 4. After summarising the Court of Appeal's reasoning (and noting that it appeared that that Court had not appreciated that it was exercising federal jurisdiction), the plurality set out the grounds of appeal in the High Court (which grounds focused on the "jurisdiction" of the primary judge to grant declaratory relief). At [59], the plurality emphasised the importance of the conceptual distinctions between the power to grant a remedy and the discretion to refuse to do so by stating: "The grounds thus expressed focused solely on jurisdiction albeit, having regard to the written submissions filed in this Court, they did not draw a clear distinction between jurisdiction, power and discretion. The conceptual distinctions are important even though, in the context of federal jurisdiction, factors relevant to the power to grant the remedy and discretionary refusal may go to the existence of a "matter"." (Emphasis added.) 1. After holding that the liquidators' claim was one within the subject matter of federal jurisdiction (essentially because of the relevance of various provisions of both the Corporations Act and the Bankruptcy Act 1966 (Cth)), the plurality identified the core remaining issue as being whether there was a "justiciable controversy" between the liquidator and the insurer. This issue was answered affirmatively at [67]: "As the Akron liquidators have submitted, their claim does not depend upon any incursion upon principles of contract law or privity of contract. They are not claiming as a party to the insurance contract nor as persons otherwise entitled to the benefit of that contract. Their claim is based upon the legal consequence created by s 562 of the [Corporations Act] in the event that CGU is liable to indemnify Crewe Sharp and, more contingently, s 117 of the Bankruptcy Act in the event that CGU is liable to indemnify Mr Crewe and he becomes a bankrupt. That legal consequence would be the bringing into existence, in favour of the Akron liquidators, of a right to the proceeds of the insurance policy payable to Crewe Sharp in respect of its liability to Akron. The interest upon which the claim for declaratory relief is based and CGU's denial of liability under the policy are sufficient to constitute a justiciable controversy between the Akron liquidators and CGU involving a question arising under a law of the Commonwealth. Because of these statutory provisions, it is the Akron liquidators who stand to benefit (to the exclusion of Crewe Sharp and Mr Crewe) from the making of the declaration sought. It would be distinctly to ignore this reality if the liquidators' interest in this regard could be defeated by reason of inaction on the part of Crewe Sharp and Mr Crewe against CGU given that the statutory provisions themselves deprive Crewe Sharp and Mr Crewe of all incentive to pursue a claim under the policy." 1. Having established that there was a justiciable controversy, the plurality then focused attention at [68] to whether the Supreme Court had power to grant the declaration sought by the liquidators. For the following reasons, it held that it did: 1. the declaration would be binding as between the liquidators and the insurer; 2. the insured were also parties to the proceeding and although they did not concede the insurer's position nor claim relief against it themselves, it was unlikely that they or the insurer would be permitted to relitigate in subsequent proceedings issues which had been determined or which properly had, and should have, been agitated in the present proceeding; and 3. for all practical purposes, the declaration sought would be the only occasion on which the insurer's denial of liability would be contested, meaning there was little or no prospect of any relitigation. Thus in the circumstances of the case, the application of "preclusive doctrines against relitigation" was "theoretical". 1. We understand the plurality's reference to "preclusive doctrines against relitigation" as including, for example, the doctrine (or principle) of issue estoppel, about which we will have more to say shortly. In contrast with the position in CGU v Blakeley, that doctrine formed part of the primary judge's reasoning in these proceedings for concluding that there was utility in granting some form of declaratory relief. 2. Not only is the term "jurisdiction" slippery, but the same may also be said about "power". It is sometimes used as a synonym for "jurisdiction", while in other cases it is used as a synonym for "discretion" which arises in the course of jurisdiction being exercised. Other times it is used with reference to the statutory source of a Court's power to grant declaratory relief. That is the sense in which the word "power" was used by Lockhart J in Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 at 420. In the present proceedings, there was no dispute that the statutory source of the Court's power to grant declaratory relief is to be found in s 75 of the Supreme Court Act, which is as follows: 75 Declaratory relief No proceedings shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby and the Court may make binding declarations of right whether any consequential relief is or could be claimed or not. 1. Much ink has been spilt on whether there is a distinction between "jurisdiction" and "power" in the context of declaratory relief. For example, in Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172, the Full Court said: "[671] There is a distinction between jurisdiction and power. The primary meaning of 'jurisdiction' is 'authority to decide'. In Harris v Caladine Toohey J said: Jurisdiction is the authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and 'such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred'. [672] However, questions of jurisdiction, power and standing may be blurred in relation to the grant of declaratory relief. As the Hon R S French AO has observed, declaration as a remedy could arguably be said to have 'one foot in jurisdiction and one foot in power'. … [675] Beyond those fundamental principles, the jurisdiction to grant declaratory relief is most often analysed in terms of power rather than jurisdiction in the strict sense of authority to decide; that is, by reference to the factors relevant to the exercise of the discretionary power to grant relief. So, for example, King CJ stated in JN Taylor Holdings Ltd, in a passage relied on by the Primary Judge, that: Authoritative judicial statements make it clear that the jurisdiction to grant declaratory relief is very wide and that judicial pronouncements appearing to restrict the circumstances in which such relief will be granted relate to the sound exercise of the discretion rather than to jurisdiction … A statement by Lord Sterndale MR in Hanson v Radcliffe Urban District Council…, quoted by Gibbs J in Forster v Jododex…, appeared to confine the otherwise unlimited character of the jurisdiction to cases involving 'a question of defining the rights of two parties'. As was pointed out, however, by Street CJ in Johnco Nominees Pty Ltd v Albury-Wodonga (NSW) Corporation…, that statement was made 'at a time when the declaratory jurisdiction had not achieved the full development manifested in the last twenty or thirty years'. By 1970 the Privy Council could say in Rediffusion (Hong Kong) Ltd v Attorney-General (Hong Kong) … that to exclude the jurisdiction it must appear 'that the questions were purely abstract questions the answers to which were incapable of affecting any existing or future legal rights of the plaintiffs. … I can find no warrant for the imposition by the courts of a self-denying restriction on their jurisdiction to grant declaratory relief. In my opinion there is no jurisdictional limit. The court's power to grant such relief is 'only limited by its own discretion' … and the boundaries of judicial power. [676] The parties did not pursue questions such as the interrelationship between a matter and standing and whether a bare declaration that produced no foreseeable consequences for the parties could not constitute a 'matter' for the purposes of Ch III of the Constitution. Those issues were considered or mentioned in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd. For example, Gaudron J observed that: There may be cases where a bare declaration that some legal requirement has been contravened will serve to redress some or all of the harm brought about by that contravention. Ainsworth v Criminal Justice Commission was such a case. But a declaration cannot be made if it 'will produce no foreseeable consequences for the parties'. That is not simply a matter of discretion. Rather, a declaration that produces no foreseeable consequences is so divorced from the administration of the law as to not involve a matter for the purposes of Ch III of the Constitution. And as it is not a matter for those purposes, it cannot engage the judicial power of the Commonwealth. … This issue can, however, be put to one side, for it is not a question raised by the Case Stated." (Emphasis added.) 1. The Full Court's reference at [672] to the observations of the Hon R S French AO is a reference to the paper which then Justice French gave entitled "Declarations – Homer Simpson's Remedy – is there anything they cannot do?" (2007) Federal Judicial Scholarship 24. His Honour said the following regarding the distinction between "jurisdiction" and "power": "[30] There is a distinction which is functional and important, if not semantically strict, between jurisdiction and power. It is a distinction with respectable antecedents and relevance to a discussion of declaratory relief. For the declaration could arguably be said to have one foot in jurisdiction and one foot in power. [31] The word "jurisdiction" was described by Isaacs J in 1907 as "generic" signifying "authority to adjudicate": State jurisdiction is the authority which State courts possess to adjudicate under the State Constitution and laws; federal jurisdiction is the authority to adjudicate derived from the Commonwealth Constitution and laws. That definition does not incorporate power to make orders or grant remedies. The point has been made on more than one occasion in the High Court. In Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 Toohey J said (at [26]): Jurisdiction is the authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and "such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred". In 2002 the Family Court, in the exercise of what was called its "welfare jurisdiction" under s 67ZC of the Family Law Act, directed the Minister for Immigration and Multicultural and Indigenous Affairs to release certain children from immigration detention. In reversing the decision the High Court again drew the distinction between jurisdiction and power. Gleeson and McHugh JJ said: In a legal context the primary meaning of jurisdiction is "authority to decide". It is to be distinguished from the powers that a court may use in the exercise of its jurisdiction. Gummow, Hayne and Heydon JJ, citing Toohey J, made statements similar in effect to those made by Gleeson and McHugh JJ. The identification of jurisdiction therefore logically precedes the discussion of the power of courts to make orders and award remedies." (Footnotes omitted.) 1. There has been some debate as to whether the "rules" identified by Gibbs J in his influential judgment in Forster v Jododex Australia Pty Ltd at 437 are directed to the jurisdiction of a superior court to make a declaratory order or rather to the question whether such a court should in its discretion grant or refuse such relief (see the discussion in JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Butterworths) at [19-115]ff). The learned authors suggest at [19-125] that recent decisions indicate that Gibbs J's "rules" relate both to the issue of jurisdiction and, where jurisdiction exists, also to discretion. 2. Santos is one such decision. That case involved the exercise of federal jurisdiction. After setting out the background circumstances in that case, at [36], Heydon J (with whom French CJ, Gummow, Crennan, Kiefel and Bell JJ agreed) identified the following questions as requiring determination – after emphasising that the questions could not "be wholly disentangled": "Does the Federal Court have jurisdiction to grant declaratory relief? Do the plaintiffs have standing, or a "sufficient interest" or a "real interest"? Is the question which the plaintiffs are raising merely hypothetical? Are the plaintiffs seeking an advisory opinion? Another, more distinct, question is whether the plaintiffs are invoking federal jurisdiction." (Emphasis in original.) 1. Recent authoritative support for the view that Gibbs J's "rules" are not confined to discretion and bear upon jurisdiction is provided by the following passage from the plurality's judgment in Hobart International Airport at [32]: "It is for those reasons that the particular question in these appeals is whether the Councils have standing. What is required to establish "standing" varies depending on the relief sought. Here, the Councils seek declaratory relief. The breadth of the jurisdiction to grant declaratory relief was considered by Gibbs J in Forster v Jododex Aust Pty Ltd. The question must be real, not theoretical. There must be a proper contradictor – someone presently existing who has a true interest to oppose the declaration sought. And the applicant must have a "sufficient" or "real" interest in obtaining the relief. There is no requirement that an applicant for declaratory relief have a cause of action in order to obtain it. Those principles are not exhaustive. These appeals turn on the nature and adequacy of the Councils' interest in the resolution of the dispute." (Footnotes omitted, emphasis added.) 1. It is also well to bear in mind the following important observations by Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ in Bass at [48] and [56], which highlight the connection between jurisdiction to grant declaratory relief and the absence of hypotheticality: "[48] It is true that some have seen the use of the declaratory judgment as little more than the giving of an advisory opinion. However, one crucial difference between an advisory opinion and a declaratory judgment is the fact that an advisory opinion is not based on a concrete situation and does not amount to a binding decision raising a res judicata between parties. Thus, the authors of one recent text on declaratory judgments emphasise that, where the dispute is divorced from the facts, it is considered hypothetical and not suitable for judicial resolution by way of declaration or otherwise. They say: "If ... the dispute is not attached to specific facts, and the question is only whether the plaintiff is generally entitled to act in a certain way, the issue will still be considered theoretical. The main reason for this is that there may be no certainty that such a general declaration will settle the dispute finally. Subsequent to that declaration a person (the defendant himself or someone else) may be adversely affected by a particular act of the plaintiff. It may then be doubtful whether this act is covered by the declaration. In such a case the affected person will probably be entitled to raise the issue again on its special facts. Indeed, such a declaration will in effect be a mere advisory opinion." … [56] Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process. And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them. It is contrary to the judicial process and no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case. …". (Footnotes omitted, emphasis in original.) 1. Having regard to the principles outlined above, the primary judge's implicit assumption that the Court had jurisdiction to grant a declaration in the terms of Order 13 was in error for the following reasons. 2. The declaration did not relate to a final or ultimate issue which would determine the rights of the parties. Indeed, arguably the primary judge recognised as much when she said at J[619] that a declaration concerning CIMIC's awareness of the matters in the Iraq File Note left open the possibility that a notification would still not lead to an indemnity for other reasons. Moreover, at J[648], her Honour expressly and correctly acknowledged that the rights of the parties only depended in part on the declaration relating to notification. The point is reinforced by what the primary judge said at [133] of her judgment on costs published on 15 June 2023 (CIMIC Group Limited v AIG Australia Limited (No 2) [2023] NSWSC 640 ("Costs Judgment")): "Berkley may be correct and CIMIC may make a claim against the 2010 Policy, which then proves to be unsuccessful, such that the declaration does not ultimately yield practical financial success for CIMIC. However, I cannot pre-emptively determine the outcome of such a claim here." Significantly, no claim for indemnity had been made against the 2010 Insurers, which distinguishes this case from cases such as CGU v Blakeley and Nautilus. 1. As Zurich pointed out, Order 13 did not finally determine the parties' rights because, if CIMIC wished to enforce any right or obtain indemnity against the 2010 Insurers, it would not only have to give notification and lodge a claim, but also conduct proceedings with a view to establishing why s 54 of the Insurance Contracts Act applied and in circumstances where it should be assumed that the 2010 Insurers would raise substantive and/or procedural defences in any such future proceedings. For example, depending upon the terms of any future notification and having regard to the history of the matter, there was a distinct possibility that the 2010 Insurers might challenge the validity of any such notification and raise defences claiming inadequate disclosure. This serves to underline the fact that Order 13 addressed what can accurately be described as a "subsidiary" issue, and not an ultimate or decisive issue upon which the rights of the parties depended. 2. That the declaration made in Order 13 was not directed to an ultimate fact or final right is highlighted by other considerations. They include the fact that the declaration left open for future disputation the question of the adequacy of the terms of any notification and whether those terms fell within cl 5.1. This is not unimportant having regard to the fact that, under cl 5.1, the notice given to the Insurer of any circumstance reasonably expected to give rise to a claim must include the reasons for anticipating that claim and provide full relevant particulars with respect to such matters as dates, the Wrongful Act, and the identities of the potential Insured and claimant concerned. 3. The primary judge's desire to avoid the possibility of inconsistent findings by making the declaration which she did in order to create an issue estoppel is, intuitively, perhaps understandable. The problem, however, is that on a more detailed analysis, Order 13 did not provide any substantial assurance against any possible inconsistent findings in further litigation involving the 2010 Insurers. This is simply because the findings which would arise for determination in any such litigation would necessarily reflect the terms of the future pleadings, which are likely to be quite different to the conspicuously limited pleadings raised by CIMIC to date against the 2010 Insurers. 4. Finally, cases which were relied upon by the primary judge, such as Santos, CGU v Blakeley and Nautilus, are distinguishable. The present case did not involve circumstances which demonstrated that there would be sufficient practical consequences for the parties to enliven jurisdiction to grant declaratory relief. Unlike the position in those other cases, the subject matter of Order 13 related not so much to a legal issue, such as the proper construction of a contract or a statute, but rather to the issue of CIMIC's state of mind during the relevant period. At its highest, this was a mixed question of law and fact. 5. Arguably, the legal part of that mixed question concerned the proper construction of cl 5.1 of the 2010 Policies. But there is nothing in the terms of the declaration in Order 13 which answers that part of the question. Rather, at its core, the declaration focuses upon the primary judge's findings of fact concerning CIMIC's state of mind during the relevant period, with particular reference to the findings set out at J[318]. Those findings provided the foundation for the declaration that CIMIC could have given notification of circumstances which were reasonably expected to give rise to a claim. Her Honour acknowledged as much at [132] in the Costs Judgment where she described CIMIC's purpose in seeking the declaration as "to bind the 2010 Insurers to the factual findings in circumstances where other proceedings for an indemnity against the 2010 Insurers remain a possibility". 6. For all these reasons, we conclude that the primary judge erred in making Order 13. In the particular circumstances, the Court lacked jurisdiction to do so. There were many facts and issues which would require determination before there could be an ultimate finding as to whether or not the 2010 Insurers were obliged to indemnify CIMIC. The declaration which was granted was, in substance and effect, an advisory opinion. It ought not to have been made. Alternatively, the Court's discretion to grant declaratory relief miscarried 1. If it be assumed (contrary to the above) that the Court had jurisdiction to grant some form of declaratory relief in the circumstances here, the exercise of that discretion miscarried. 2. The primary judge considered that granting some form of declaratory relief so as to give rise to an issue estoppel would quell the justiciable controversy regarding CIMIC's state of mind during the relevant period. It is clear from J[641] that the primary judge considered that such declaratory relief would create an issue estoppel (as, indeed, was Zurich's contention below). 3. Moreover, in her Honour's subsequent Costs Judgment, CIMIC's purpose in seeking the declaration was described by the primary judge at [132] as "to bind the 2010 Insurers to the factual findings in circumstances where other proceedings for an indemnity against the 2010 Insurers remain a possibility". This is the language of an issue estoppel. 4. It may be appropriate in some circumstances to grant declaratory relief (assuming jurisdiction exists) with the purpose and effect of creating an issue estoppel. This is not such a case. First, however, it is appropriate to say something more briefly about the doctrine or principle of issue estoppel. 5. Justice Dixon's description of the doctrine of that concept in Blair v Curran (1939) 62 CLR 464 at 531; [1939] HCA 23 is frequently referred to: "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies." 1. In Blair v Curran, Dixon J added at 532-533 that what is precluded by issue estoppel is what is legally indispensable to the conclusion. Thus, in the case of matters of fact, the issue estoppel is normally confined to the ultimate facts which form the ingredients in a cause of action, i.e., facts which are fundamental to the decision. As Gleeson CJ remarked in Murphy v Abi-Saab (1995) 37 NSWLR 280 at 288 ("Murphy"), the difficulty which arises lies in the distinction between findings of fact or law which are fundamental or cardinal to a judgment and other findings. In applying that distinction, close attention should be paid to the pleadings, where they are present: see Murphy at 287-288. 2. When regard is had to the terms of [187]-[189] of the FACLS it is immediately apparent that the pleadings there did not identify any asserted fact which underpinned any right on CIMIC's part to give notification under cl 5.1 during the period of the 2010 Policies. Indeed, as the 2010 Insurers have repeatedly pointed out, to plead otherwise would have been inconsistent with CIMIC's primary case against the 2011 Insurers that it had no such awareness. 3. Arising from what is said above regarding issue estoppel, we disagree with the primary judge's reasons for distinguishing Ozmanian and Trans Realties, which had the effect of discarding the significance of the admonitions in those cases concerning the grant of bare declaratory relief so as to create an issue estoppel. 4. As to the primary judge's reasons for not viewing Kiefel J's obiter observations in Ozmanian concerning the rarity of making a bare declaration as standing in the way of granting a form of the alternative declaratory relief sought by CIMIC, we agree that the primary judge was correct to emphasise that those observations have to be read in context, but that does not mean that the admonitions had no application to the circumstances here. 5. The context in Ozmanian involved the trial judge having made a declaration that there had been a denial of procedural fairness in the course of conduct undertaken for the purpose of the Minister deciding not to consider exercising the power under s 417 of the Migration Act 1958 (Cth) to substitute a more favourable decision for an applicant for refugee status than that which had been determined by the then Refugee Review Tribunal. The Minister's power in s 417 was non-compellable. On appeal, the Full Court held that the effect of s 485 of the Migration Act was to deprive the Federal Court of jurisdiction to review the Minister's decision under s 417 as well as the preceding conduct. Accordingly, the declaration made by the trial judge there was in respect of a matter in which the Court lacked jurisdiction. 6. Another part of the relevant context in Ozmanian was the fact that the applicant there also had on foot separate proceedings in the High Court regarding the Minister's s 417 decision and the possibility that those proceedings might be remitted to the Federal Court. However, Kiefel J did not regard this possibility as a sufficient basis for the trial judge to grant declaratory relief. Her Honour said at 32-33: "With respect to his Honour, the inquiry for the Court, when considering the grant of declaratory relief in such circumstances, cannot be whether it will be productive of any legal consequence. If the utility of a declaration is to be found in its operation within other proceedings between the parties, the Court must consider what use it will serve and what it might resolve. It is, after all, to operate by way of a remedy. And a consideration of possible outcomes does not support the order made. The example given by his Honour — the creation of an issue estoppel — highlights the problem. For what facts and issues the declaration forecloses, it had the potential to create dispute between the parties as to the extent of its operation and produce the undesirable consequence of preventing the Judge, who is to hear and determine the matter, from coming to a view on an important aspect of the matter and one influential as to the appropriate relief to be granted. It is, needless to say, regrettable that it was not sought to have those proceedings heard at the same time as the application before his Honour. Regardless of the source of power for the grant of a declaration of this kind, the object of it, in the context of its effect on other proceedings, must be the determination of matters in controversy between the parties and the limitation of proceedings. This finds expression of course in s 22 of the Federal Court of Australia Act 1976 (Cth). To like effect is s 63 of the Supreme Court Act 1970 (NSW). In Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 at 183 all that could be achieved by the declaration there sought was the creation of an issue estoppel which might operate in later proceedings brought for damages for breach of contract. Mahoney JA did not consider that that sufficed as a proper use of the power (see also Glass JA at 176)." (Emphasis added.) 1. The primary judge was correct to emphasise these matters of context in Ozmanian. But this does not detract from the force of Kiefel J's admonitions concerning the grant of declaratory relief so as to create an issue estoppel. Kiefel J emphasised how, in the circumstances of Ozmanian, an issue estoppel would foreclose some facts and issues, but could also foster dispute as to the extent of its operation and unduly restrict the hearing and determination of important aspects of the matter in future proceedings. Those aspects include the matters which I have highlighted at [564]ff above. 2. Turning now to the primary judge's view at J[646] that the circumstances in Trans Realties were "quite different" from the circumstances here, even if that be the case, that does not mean that the observations in that case concerning the inappropriateness of granting bare declaratory relief where important issues remain to be determined should be discounted. 3. Trans Realties involved a dispute over the sale of land. A contract had been entered into, but not completed, when the vendor issued a notice of rescission. The purchaser sought a declaration that the contract had not validly been rescinded. This was described by Hutley JA as presenting a "false issue". This was because the validity of the rescission did not only depend upon the grounds given in the notice of rescission; thus the vendor could succeed if other grounds for rescission could be made out. 4. In Trans Realties at 182-183, Mahoney JA stated that, within proper limits, the parties should be given considerable scope to determine what in fact is in dispute between them at a particular time and what it is that they want the Court to determine and that s 63 of the Supreme Court Act gave the parties some choice as to what to bring forward to the Court for determination as a matter of controversy. After referring to the observations of Barwick CJ and Jacobs J in Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286; [1974] HCA 18 ("Neeta") regarding that subject, Mahoney JA acknowledged, at 185, that a number of matters had to be attended to before the contract of sale could be completed but that the contract was less than precise on those matters. He then added that it was not clear on the material before the Court as to what would in fact be involved in the doing of those things and how much time would be involved. His Honour recognised that if it was likely that disputes would arise in relation to such matters preceding completion, it might be appropriate to determine the issue of the validity of the contract in a proceeding confined to that issue. Absent evidence indicating that the circumstances in Trans Realties were of that description, his Honour considered that the admonitions in Neeta applied. 5. In Trans Realties, Hutley and Glass JJA expressed perhaps even stronger views than did Mahoney JA on the inappropriateness of granting bare declaratory relief in the circumstances there. As noted above, Hutley JA described, at 173, the parties' approach as offering to the Court "a false issue". Notwithstanding the reforms effected by ss 63 and 75 of the Supreme Court Act, Glass JA said at 176 that the admonitions in Neeta still applied and that "the public interest in finality will generally override the private interest in selective litigation". 6. It appears that Kiefel J had similar concerns in Ozmanian when she referred approvingly to Mahoney JA's reasons in Trans Realties in support of the proposition that it was inappropriate to use declaratory relief so as to create an issue estoppel where there was potential for the parties to dispute the extent of the issue estoppel. That potential also existed here, having regard to the matters highlighted above. We consider that the primary judge failed to consider and give effect to those matters. 7. The cautionary principle concerning the making of bare declarations which emerges from Neeta has not always been applied to cases involving contracts for the sale of land: see Lohar Corp, relevantly quoted in Meagher, Gummow and Lehane's Equity: Doctrine & Remedies at [19-305]. Nonetheless, the principle has been applied in other settings. Ozmanian itself is such an example. Other examples include Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 482 per Wilcox and Ryan JJ (termination of employment); Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 at 188 (bankruptcy); and Bartz v Department of Corrective Services [2000] QSC 336 at [16] (failure to carry out review of a prisoner's security classification under s 13(2) of the Corrective Services Regulation 1989 (Qld)). 8. Needless to say, determining whether or not there is any real value or practical consequences to warrant the grant of bare declaratory relief requires close analysis of all relevant circumstances in a particular case. As Kennett J recently remarked in Islam v Director-General, Justice and Community Safety Directorate [2022] ACTSC 124 at [64], there may be a greater propensity to grant such relief in regulatory proceedings, particularly under trade practices legislation: "…Such declarations in effect merely restate findings of the court which usually form the foundation for a grant of other remedies (such as injunctions or civil penalties) in the same proceedings. They are regarded as having utility on the basis that they define and publicise the type of conduct that constitutes a contravention (See, eg, Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 216 CLR 53, [95] (Gummow, Hayne and Heydon JJ)) or that they signify the court's disapproval of the relevant conduct (Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, 100 (Sheppard J, Foster J agreeing) (Tobacco Institute). In this class of case the utility of declaratory relief arises from considerations of the public interest (see Tobacco Institute at 107 (Hill J)) rather than concrete consequences for the parties." 1. In Islam, declaratory relief was granted in judicial review proceedings in which it was established that, in imposing disciplinary action on a prisoner, the corrections officer had failed to comply with various provisions of the Corrections Management Act 2007 (ACT) which gave rise to jurisdictional error. 2. Kennett J concluded that, in those circumstances, it was appropriate to grant declaratory relief because: 1. the declaration would have foreseeable consequences for the applicant, even though those consequences may not be likely to come to pass and may not be of great practical significance (at [66]); 2. even though the prospect of future consequences for the applicant might be seen as "tenuous", this was not a case where the relevant controversy was either hypothetical or truly moot (at [66]); and 3. other considerations supported the grant of declaratory relief as a matter of discretion, including the fact that the controversy concerned an exercise of public power and there was no other remedy available to the applicant to challenge the disciplinary action. 1. None of those considerations arise here. More significantly, there are several reasons why it was inappropriate to grant relief in the form of Order 13, as explained above. 2. Finally, contrary to CIMIC's submission, Order 13 is not supported by what the plurality said in Unions NSW at [21]: "A plaintiff will have and maintain a real or sufficient interest in obtaining relief if and for so long as they seek a declaration of their own rights, legal interests or liabilities, or if and for so long as the declaration sought will directly affect their rights, legal interests or liabilities. Generally, such a declaration will have foreseeable consequences for the plaintiff because they will be able to legally enforce those rights, interests or liabilities. So, for example, a declaration of invalidity of a law (even where the law has been repealed or amended) may have foreseeable consequences for that plaintiff where such a declaration assists to negative a statutory defence to a common law cause of action such as an intentional tort, or where the plaintiff is being prosecuted for breach of that law. The past infringement of certain personal rights or interests of a plaintiff, such as reputation and liberty, may also be sufficient for seeking declaratory relief even where there are no other asserted legal consequences." (Footnotes omitted.) 1. That paragraph is principally directed to the issue of standing to seek declaratory relief (noting, however, that as Heydon J pointed out in Santos at [36], questions of jurisdiction, standing and hypotheticality cannot be wholly disentangled). This is evident not only from its own terms (and also the terms of the immediately succeeding paragraph), but also from the fact that it appears immediately after a heading in the judgment: "Standing to seek a declaration". Equally importantly, however, that passage affirms the well established principle that declaratory relief should only be given where it will have foreseeable consequences for the plaintiff because they will be able legally to enforce their rights, legal interests or liabilities, subject to exceptional cases, of which Ainsworth and Plaintiff M61/2010E v The Commonwealth of Australia (2010) 243 CLR 319; [2010] HCA 41 are examples. 2. For all these reasons, we consider that the primary judge erred in making Order 13. 3. For completeness, on one view, the wording of Issue 15 did not fully reflect Berkley's claim that the primary judge erred in not accepting its limitation defence. For similar reasons to those given above at [494] and also noting Berkley's success on other parts of Issue 15, it is unnecessary to determine this matter. Issue 14: Did the primary judge err in making the declaration against Arch/Dual based on her Honour's findings and the failure to deal with the submissions summarised at J[623]? 1. This issue, which relates to that part of Order 13 concerning Arch/Dual, arises from J[623], where the primary judge summarised the position of Arch/Dual concerning the declaration as initially sought by CIMIC and the subsequent alternative declaration: "Arch and Dual's position was applicable to both forms of the declarations. They submitted that any declaration against them is pointless, because, even if CIMIC could otherwise succeed against the 2010 Insurers, Arch and Dual's exposure will not be reached because they are too high up in the tower. That submission depends on CIMIC failing to demonstrate that all the Costs claimed, including the Gregg Prosecution Costs, fall within the operation of the 2010 Policy. Arch and Dual resist being liable for the Gregg Prosecution Costs that only arose after the conclusion of the 2010/11 Policy period. However, it was accepted that if I found a connection between the Gregg Prosecution Costs and the circumstances surrounding the Iraq File Note, then the Deeming Clause (cl 5.4) would capture those costs." 1. Although the primary judge summarised in broad terms at J[623] some of the grounds raised by Arch/Dual in opposing both the initial and alternative forms of the declaration sought by CIMIC, her Honour did not explain in her primary judgment why those submissions were not accepted. As previously mentioned, her Honour did not publish separate reasons for judgment explaining the orders made on 12 October 2022 including Order 13. This was so notwithstanding that the parties had availed themselves of the opportunity to make detailed written submissions after the primary judgment was published on the form of final orders. Those written submissions included supplementary submissions made by Arch/Dual with the Court's leave below which responded to an affidavit dated 22 August 2022 by CIMIC's solicitor Mr Jonathan Light. This affidavit was provided in conjunction with CIMIC's written submissions on final orders. CIMIC relied upon the affidavit in response to Arch/Dual's claim that declaratory relief against them would be purely hypothetical because the 2010 Sixth Excess Policy which Arch/Dual held with Leighton would not be triggered. We will return to address this matter below. 2. Before doing so, however, it is appropriate to note that, in her separate Costs Judgment, the primary judge briefly touched upon Arch/Dual's opposition to the grant of declaratory relief. In concluding that there should be no order as to costs between Arch/Dual and CIMIC, her Honour reasoned as follows at J[154]-[157]: "[154] Arch/Dual submit that CIMIC knew the Arch/Dual layer would never be reached for a few reasons. First, because in August 2021 CIMIC did not consider Arch/Dual would be liable to CIMIC on a "worst case scenario". I do not consider the pre-litigation correspondence about estimated "worst case scenarios" determines the matter. CIMIC did amend its claim after that correspondence to include the Gregg Prosecution Costs, which increased the total indemnity sought. [155] Secondly, Arch/Dual say their layer would only be relevant if the Gregg Prosecution Costs ought to be indemnified by the 2011 Insurers, or the 2010 Insurers if a later claim was made under the 2010 Policy. Arch/Dual then submit that because it was found that the Gregg Prosecution Costs were to be borne by the 2013/14 Policy, those costs could not form part of a claim for indemnity from the 2010 Insurers, and therefore Arch/Dual could never be liable. [156] While it is correct that future costs flowing from the Iraq File Note, such as potential prosecutions of former executives, were not part of CIMIC's case against the 2011 Insurers, had it been found that the 2011 Insurers were liable to indemnify CIMIC for all the losses claimed, the indemnity would be ongoing and further losses could be sought if, and when, incurred. Any claim made against the 2010 Insurers would need to be considered, if, and when, such a claim is made. [157] Had Arch/Dual considered there was no practical risk to it in a declaration concerning factual matters being made, a submitting appearance could have been filed, save as to the form of such declaration. I do not accept that CIMIC caused Arch/Dual's costs and ought be liable for them." 1. This Court is in as good a position as the primary judge to resolve the matters raised by Arch/Dual and which are reflected in Issue 14. The pleading objections 1. Arch/Dual raised two pleading objections. The first was that no claim had been made on any 2010 or 2011 Insurer in relation to any potential future costs which might provide the basis for a future claim. There were no pleadings, evidence or findings in respect of any such potential future claims. The only payments raised by CIMIC in its pleading were in respect of the 2011 Insurers and comprised the six payments set out in [3] of CIMIC's further amended summons. CIMIC's case did not go beyond seeking recovery for those particular amounts (totalling $45.6 million), being payments which had been made by it. Thus the controversy was confined to those six payments and that total amount, not any future claim for indemnity. 2. In oral address on appeal, Mr Jones SC (who appeared for CIMIC together with Mr Ryde) acknowledged that CIMIC's case against the 2011 Insurers was limited to those six payments. He explained that was because they were the only payments which CIMIC had made to date and in respect of which the 2011 Insurers refused indemnity. He emphasised that nothing in Order 13 is addressed to any payments and that the declaration made there is confined to the question of awareness. He also emphasised that because various prosecutions were ongoing, there was still potential for future claims to be made. It was in this context that CIMIC provided Mr Light's affidavit. 3. We accept CIMIC's submissions and reject Arch/Dual's first pleading objection. 4. Arch/Dual's second pleading objection was that even if Mr Light's affidavit demonstrated that their layer could be reached, this was not pleaded as "Loss" below and was not the subject of evidence. 5. As will shortly emerge, having regard to the lack of weight which should be given to Mr Light's affidavit, it is unnecessary to resolve this matter. Mr Light's affidavit and the question whether Arch/Dual's layer would be reached 1. Arch/Dual contended that there was no controversy between them and CIMIC because if the six pleaded payments were ultimately indemnified by the other 2010 Insurers, the layer applicable to Arch/Dual would not be reached. Accordingly, they submitted that there was no controversy between them and CIMIC as to warrant them being included in Order 13 and insofar as the declaratory relief applied to them, it was hypothetical. 2. In its written submissions below dated 22 August 2022 in support of its proposed orders, CIMIC submitted that Arch/Dual should be covered by the proposed declaratory relief because "a claim may be brought by CIMIC against Arch and Dual for costs which CIMIC is presently aware may be incurred but which have not yet been incurred." CIMIC relied upon Mr Light's affidavit regarding the likelihood of CIMIC having to pay further legal costs because of the ongoing prosecution of Mr Savage. In brief, Mr Light claimed that CIMIC was incurring ongoing costs for criminal proceeding arising from the AFP Investigation, including in respect to the prosecution of Mr Savage. Mr Light estimated that Mr Savage's legal fees to date were "substantial". He also opined that if the prosecution of Mr Savage went to trial, there would be significant additional costs. Mr Light estimated that the costs of Mr Savage's defence could exceed $5 million (excluding GST). 3. CIMIC submitted that, having regard to the primary judge's reasons for judgment dated 27 July 2022 and the finding that neither the 2011 Insurers nor Chubb under the 2013 Primary Policy were liable to pay various costs or amounts totalling $41,553,707 (in respect of the MCI Class Action, the Inabu Class Action and the Inabu Settlement Amount), there was that amount in cover before Arch/Dual's excess layer was enlivened. Thus that layer would only be reached once approximately $3 million of further liability was incurred by CIMIC. CIMIC then pointed to the Light affidavit, which estimated that the costs of the Savage prosecution could exceed $5 million. On this basis, it submitted that the Arch/Dual layer could well be reached and there was utility in including those parties in the declaratory relief. 4. In their supplementary submissions below, Arch/Dual contended that Mr Light's affidavit was deficient and should not be relied upon. For the following reasons, we accept their submission that no weight should be given to the affidavit: 1. Mr Light's estimate that Mr Savage's legal costs could exceed $5 million was made in circumstances where Mr Light acknowledged that he was not aware of the details of Mr Savage's defence or the charge out rates of his legal representatives. Thus the basis for his estimate is speculative. This difficulty is not overcome by Mr Light's brief comparative analysis with the costs incurred by Mr Gregg in his defence. Those costs, which were approximately half of the estimate of Mr Savage's future legal costs, were then doubled by Mr Light having regard to the longer duration of the proceedings against Mr Savage, the greater complexity of the factual background concerning the Iraq projects and general inflation. Those matters were not further developed by Mr Light. They are expressed at such a high level of generality as to provide little if any guidance or support for accepting Mr Light's estimate. The matters relied upon by Mr Light are simply unsupported assertions. In these circumstances, his estimate of Mr Savage's future legal costs should be given no weight. 2. As Arch/Dual pointed out, CIMIC relied on no other evidence to support Mr Light's opinions or expectations as to the costs of future claims. 1. For these reasons, no weight should be given to Mr Light's affidavit concerning foreseeable future legal costs. Accordingly, we accept Arch/Dual's submission that another reason why Order 13 should not have been made against them is that CIMIC's case against them was hypothetical as there was no evidence that the 2010 Sixth Excess Policy would be triggered. Whether future claims for costs fell within the 2012 Notification 1. Arch/Dual also contended that any future claims for costs arising out of the AFP Investigation and criminal prosecutions generated from that investigation might fall within the 2012 Notification. This contention was based on the primary judge's findings at J[367]-[368]. 2. This contention was not contested by CIMIC on the appeal. It provides another reason why, assuming contrary to the above that Order 13 was appropriately made, it ought not to have included Arch/Dual. Issue 16: Did the primary judge err in exercising the costs discretion? 1. The primary judge delivered extensive separate reasons on the issues of costs, having observed that the parties had been unable to reach agreement on any issue, save for AIG and Swiss Re agreeing to bear their own costs of AIG's cross-claim against Swiss Re. 2. Because we have reached a different view on some of the issues decided by the primary judge, namely, Orders 9 to 11 made on 12 October 2022 (orders for contribution by Berkley to AIG in respect of the Investigation Costs) and the declaration in Order 13, it will be necessary to re-exercise the costs discretion in some respects. 3. However, we take as a starting point the costs orders made by the primary judge. In some cases the primary judge had to determine whether costs should be payable on an indemnity basis having regard to Calderbank offers that had been made. We see no error in the way the primary judge dealt with those questions. 4. The primary judge made the following orders as to costs on 23 June 2023: "The Court orders that: 1 These costs orders are subject to all costs orders already made in the proceedings, including the following costs orders: (a) order 1 made by Justice Ball on 19 October 2021; (b) order 2 made by Justice Hammerschlag on 31 January 2022; (c) order 2 made by Justice Ball on 11 February 2022; (d) order 1 made by Justice Peden on 9 May 2022; and (e) order 1 made by Justice Peden on 19 May 2022. CIMIC's claim 2 CIMIC pay: (a) 90% of AIG's costs of the proceedings on an ordinary basis up to and including 14 May 2022, as agreed or assessed; and (b) AIG's costs of the proceedings after 14 May 2022 on an indemnity basis, as agreed or assessed; and (c) interest on the costs referred to in orders 2(a) and 2(b), calculated at the Court rates from the dates on which the costs were paid by AIG. 3 CIMIC pay: (a) 90% of Chubb's costs of the proceedings on an ordinary basis, as agreed or assessed; and (b) interest on the costs referred to in order 3(a), calculated at the Court rates from the dates on which the costs were paid by Chubb. 4 Chubb pay: (a) 10% of CIMIC's costs of the proceedings on an ordinary basis, as agreed or assessed; and (b) interest on the costs referred to in order 4(a), calculated at the Court rates from the dates on which the costs were paid by CIMIC. 5 CIMIC pay: (a) Catlin's costs of the proceedings on an ordinary basis, as agreed or assessed; and (b) interest on the costs referred to in order 5(a), calculated at the Court rates from the dates on which the costs were paid by Catlin. 6 CIMIC pay: (a) Liberty's costs of the proceedings on an ordinary basis up to and including 9 October 2020, as agreed or assessed; (b) Liberty's costs of the proceedings after 9 October 2020 on an indemnity basis, as agreed or assessed; and (c) interest on the costs referred to in orders 6(a) and 6(b), calculated at the Court rates from the dates on which the costs were paid by Liberty. 7 No order as to costs between CIMIC and each of Berkley, Swiss Re, Zurich and Arch/Dual. AIG's cross-claim 8 Berkley pay: (a) AIG's costs of AIG's cross-claim against Berkley on an ordinary basis, as agreed or assessed; and (b) interest on the costs referred to in order 8(a), calculated at the Court rates from the dates on which the costs were paid by AIG. 9 No order as to costs between AIG and Swiss Re." 1. The reason CIMIC was ordered to pay 90% and not 100% of AIG's costs up to 14 May 2022 was that AIG failed in its opposition to CIMIC's claim in respect of the Investigation Costs (Costs Judgment at [58]). Costs were awarded on an indemnity basis from 14 May 2022 for all of AIG's costs on the basis of a Calderbank offer whereby AIG offered to pay $3 million inclusive of costs and interest. AIG substantially bettered that offer when it was held liable to pay only the Investigation Costs plus interest. That finding has been upheld. Order 2 should not be disturbed. 2. Order 3 concerning the costs payable by CIMIC to Chubb was made on the same basis as the order for costs payable by CIMIC to AIG except that Chubb had not made a Calderbank offer or offer of compromise. Order 3 should not be disturbed. 3. Order 4 was made on the basis of the primary judge's finding that Chubb was liable under its 2013/14 policy for costs described as the "ASIC Non-Iraq Investigation Costs" and the "Gregg Investigation Costs" which (with interest) exceeded $3 million. There was no appeal from that finding, nor from Order 4. 4. Order 5 required CIMIC to pay Catlin's costs on the ordinary basis. That order followed because Catlin's First Excess Policy did not respond due to the failure of CIMIC's Company Securities Claims. The primary judge found that Catlin was not entitled to its costs on an indemnity basis after having served a Calderbank offer because it was not unreasonable for CIMIC not to have accepted the offer. Catlin does not challenge that finding. Accordingly, Order 5 should not be disturbed. 5. Order 6, which provides for part of Liberty's costs to be payable on an indemnity basis, was made on the basis of a Calderbank offer made by Liberty. There is no basis to disturb Order 6. 6. Order 7, that there be no order as to the costs between CIMIC and the 2010 Insurers, must be set aside because the declaration in Order 13 is to be set aside. 7. Order 8 must also be set aside because Berkley's appeal against the order for contribution obtained by AIG is to be allowed. 8. Order 9 was made by consent and should not be disturbed. Berkley's complaint of procedural unfairness 1. An additional issue, not raised specifically in the Agreed List of Issues, is Berkley's complaint both below and on appeal that the granting of any form of declaratory relief against it would involve procedural unfairness. It identified the procedural unfairness as arising from the primary judge's refusal to allow it to cross-examine Mr Wild and it being afforded only a limited time to ask non-leading questions of Mr Stewart regarding the matters contained in the Iraq File Note. In oral address on the appeal, Mr Walker SC (who appeared for Berkley alongside Mr Friedgut) candidly acknowledged that Berkley's procedural fairness case was a "tall order" because the appeal was a "rehearing". Nevertheless, the complaint of procedural unfairness was pressed and Berkley maintained it was proper for it to seek to elicit from cross-examination of those two witnesses the nature and extent of their awareness of matters which might trigger the operation of cl 5.1. 2. For the following reasons, Berkley was not denied procedural fairness. First, it is evident that in the course of the trial Berkley did not ultimately press its application to cross-examine Mr Wild. Its request to cross-examine him was opposed by AIG's senior counsel, Mr Rich SC. AIG then proceeded to cross-examine Mr Wild and Berkley made no further application to do so. In the course of an exchange with the primary judge as to whether evidence adduced in the cross-examination of Mr Wild could be deployed against Berkley, the issue of Berkley cross-examining Mr Wild was raised again. The primary judge asked Mr Friedgut (who was unled in the proceedings below) as to the basis on which he would be entitled to cross-examine Mr Wild. As is evident from Mr Friedgut's following response, Berkley did not press its request to cross-examine Mr Wild: "FRIEDGUT: Only on the basis of questions asked in cross-examination. But if your Honour's against me in that, I'm not going to take the time of the Court. It purely is in cross-examination. I would not have sought to, had I been asked to cross-examine first, as was originally the application of my friend, Mr Rich. I would have no questions to ask him because there was nothing which would possibly touch on the case of the 2010 Insurers. Unless the inference be drawn. And I don't even know what the inference could be. But just to guard against that possibility, I'm saying, I'm ready to cross-examine. But if your Honour's against me, I'm perfectly happy to sit down, your Honour. I'm not going to be pressing the point. I'm simply saying that I will be seeking to clarify matters that were raised in cross-examination. But I'm perfectly happy not to do so." 1. As to Mr Stewart, Berkley applied to cross-examine him after the 2011 Insurers had finished their cross-examinations. The application was described by Mr Friedgut as a "formal" application to review what Mr Friedgut described as a previous ruling by the primary judge that Berkley did not have a right to cross-examine Mr Stewart. But as senior counsel for both CIMIC and AIG pointed out, no such ruling had in fact been made. When Mr Friedgut was asked by the primary judge to identify the nature of any cross-examination, he said that it "would go to state of mind" and to Mr Stewart's understanding as to whether the claim was a genuine claim. 2. Senior counsel for AIG then submitted that what Mr Friedgut really wanted was to lead evidence in chief on the cross-claim and that, if this was permitted, he should not ask any leading questions. The Court granted Mr Friedgut leave to ask non-leading questions of Mr Stewart for an initial period of 15 minutes. That is what then occurred, during which there were numerous successful objections to leading questions put to Mr Stewart. Ultimately, the Court granted Mr Friedgut an additional five minutes to question Mr Stewart, during which time there were numerous successful objections on grounds of relevance. 3. Having regard to all these matters, there is no substance in Berkley's complaint of procedural unfairness relating to its opportunity to test the evidence of Messrs Stewart and Wild. We accept CIMIC's submission that Berkley failed to identify with sufficient particularity the scope of its cross-examination of Mr Stewart. Moreover, Berkley has demonstrated no practical injustice which it suffered as a result of the limitations imposed by the primary judge on its questioning of Mr Stewart. Finally, Berkley did not press its request to cross-examine Mr Wild. 4. For these reasons, Berkley's complaints of procedural unfairness are rejected. Costs of the appeal 1. CIMIC must pay the 2011 Insurers' costs of its cross-appeal in the Berkley Appeal in which it challenged the primary judge's findings concerning the 2011 Insurers' liability for the Company Securities Claims. 2. CIMIC must also pay the 2010 Insurers' costs of their successful challenge to the making of the declaration in Order 13. 3. AIG must pay Berkley's costs of Berkley's appeal from the orders for contribution against Berkley. 4. Chubb must pay the costs of its NOA. 5. In the court below, some parties sought special costs orders on the basis of Calderbank offers. We do not know whether any party will rely on those offers or any later offers for special costs orders with respect to the issues in this Court. 6. The parties should confer and endeavour to reach agreement as to the costs of the issues in this Court in accordance with these reasons. 7. We further order that within 28 days the parties provide the Court with consent orders as to the costs of the issues in this Court, to the extent agreement has been reached. 8. To the extent agreement as to the costs of the appeals, cross-appeals, and NOCs has not been reached, within 28 days the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party's submissions on the issues in contention. 9. Subject to any contrary order, any disputed issue as to costs will be dealt with on the papers. Orders 1. For these reasons, we make the following orders: 1. Zurich Appeal (2022/00334409) 1. Zurich's appeal allowed in part. 2. CIMIC's cross-appeal dismissed. 3. AIG's cross-appeal dismissed. 1. Berkley Appeal (2022/00334264) 1. Berkley's appeal allowed. 2. CIMIC's cross-appeal dismissed. 1. Arch/Dual Appeal (2022/00335502) 1. Arch/Dual's appeal allowed. 1. Chubb Appeal (2022/00336236) 1. Chubb's appeal dismissed. 1. Set aside Orders 9, 10, 11 and 13 made on 12 October 2022 and Orders 7 and 8 made on 23 June 2023. 2. In lieu thereof order that: 1. Subject to the relief granted by Orders 2 to 5 made on 12 October 2022 and Orders 1-6 and 9 made on 23 June 2023, CIMIC's further amended summons dismissed with costs. 2. AIG's first cross-claim against Berkley dismissed with costs. 1. Within 28 days hereof the parties provide the Court with consent orders as to the costs of the proceedings in this Court, to the extent agreement has been reached. 2. To the extent agreement as to the costs of the appeals, cross-appeals, and notices of contention has not been reached, within 28 days hereof the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party's submissions on the matters in contention concerning costs. The issues of costs will, subject to any contrary order, be dealt with on the papers and without a further hearing. ******** Amendments 18 September 2024 - Update to coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 September 2024