New South Wales Supreme Court CITATION : Susan Elizabeth Taylor v Dexta Corporation Ltd & Ors [2005] NSWSC 974 HEARING DATE(S) : 27.06.05, 28.06.05, 29.06.05 JUDGMENT DATE : 29 September 2005 JUDGMENT OF : Nicholas J DECISION : para 66 CATCHWORDS : INSURANCE - home warranty insurance policy - construction - whether building contract entered into during policy period - whether building owner entitled to indemnity - CONTRACT - rectification of insurance policy - whether common intention established - PROCEDURE - application for judgment under Pt 18, r 3 on defendants' admissions - whether plaintiff entitled to judgment LEGISLATION CITED : Home Building Act 1989 s 99(1), s 92(1), s 102, s 103B Brunker v Perpetual Trustee (1937) 59 CLR 140 Damberg v Damberg & Ors [2001] NSWCA 87 Gramophone Company Ltd v Magazine Holder Co (1911) 28 RPC 221 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 CASES CITED : Muriti v Prendergast [2005] NSWSC 281 Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 Termijtelen v van Arkel & Anor (1974) 1 NSWLR 525 Wilkie v Gordian Runoff Ltd [2005] HCA 17 Susan Elizabeth Taylor - plaintiff Dexta Corporation Ltd - first defendant PARTIES : Allianz Australia Insurance Ltd - second defendant BP Group Pty Ltd (in liquidation) - third defendant FILE NUMBER(S) : SC 55011/05 Janet Oakley - plaintiff Cameron Burge - first and second defendant COUNSEL : Pricewaterhousecoopers Legal - plaintiff SOLICITORS : Hunt & Hunt - first and second defendant LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST Nicholas J 29 September 2005 55011/05 Susan Elizabeth Taylor v Dexta Corporation Ltd & Ors JUDGMENT 1 His Honour: These proceedings arise from the refusal by Allianz Australia Insurance Ltd (Allianz), the second defendant, to indemnify Susan Elizabeth Taylor, the plaintiff, as beneficiary under a home warranty insurance policy issued to a builder under the Home Building Act 1989 (the Act). The policy was arranged through Dexta Corporation Ltd (Dexta), the first defendant, which was the second defendant's insurance broker and agent. 2 On 27 September 2001 the plaintiff as the owner entered into a contract with Montcom Group Pty Ltd (the company), now known as BP Group Pty Ltd (in liquidation), the third defendant/first cross-defendant, under which the company agreed to construct a dwelling at the property No. 47 Belinda Place, Newport (the property). Mr Maurice Monti (Mr Monti), the second cross-defendant, was a director of the company and the person with whom the plaintiff dealt in relation to the building work. 3 The policy period was from 16 November 2001 to 16 November 2002. The company failed to complete the work and in due course the plaintiff made a claim against the second defendant under the policy. Indemnity was refused on the basis that the contract for the building work was entered into prior to the commencement of the policy. 4 Messrs Peter Monti, Paul Talone, and Benjamin Marshall, are the third, fourth, and fifth cross-defendants respectively, and were also directors of the company. Neither the company nor the individual cross-defendants appeared at the hearing. The hearing of the cross-claim was deferred pending determination of the plaintiff's claim. 5 It was agreed that if the plaintiff was successful she would be entitled to damages in the amount of $200,000.00 with interest, and to an order for costs in her favour. 6 The issues for determination concern the construction of the policy, a claim for rectification of the policy, and an application for judgment under Pt 18, r 3 on the admissions contained in the defence to the second further amended statement of claim. Background 7 The following narrative is of events which provide some background for the better understanding of the plaintiff's claims. Most of these matters were not in dispute and, in any event, there was ample evidence for the finding that each took place. 8 On 10 September 2001 Mr Monti on behalf of the company completed the application form which was a proposal for home warranty insurance. In the section headed "Construction Information" he stated the estimated number of jobs for the next 12 months to be seven with a total value of $1,400,000.00. In the section headed "Contractor's History" he answered "No" to the question: "Have any contracts been entered into, building permits obtained, or work commenced on any projects for which home warranty insurance has NOT been arranged?". Mr Monti completed the Applicant's Declaration which included the following statement: "I/We hereby declare that: … should any information given by me/us between the date of this Application and the date of any proposal for insurance to which this Application relates change, I/we shall give immediate notice thereof; …". The application included statements by directors of personal assets and liabilities, and financial information concerning the company. 9 On 13 September 2001 the company's insurance brokers, Hignett-Knight (HK) sent the application to Dexta with a request for a quotation for the provision of annual home warranty insurance. On 14 September 2001 Dexta acknowledged receipt of the application and advised of a delay of about one or two weeks in carrying out an assessment and providing a quotation. The reference number for the application was given as 19806. 10 On 27 September 2001 the plaintiff and the company entered into a contract for the building work for a total price of $263,950.00. Included in the contract was the section entitled "Schedule 4: Warranty Insurance", immediately above which was the following note: "Note: The builder must not carry out any building work or demand or receive any part of the contract price until warranty insurance is in force and the owner is provided with the certificate of insurance". In this schedule the only information given was the name of the insurer as Dexta, and the reference number of the insurance application. The parties signed the contract in the spaces provided on page 8 thereof, beside which was the following: "Note: The builder must not demand or receive any part of the contract price until warranty insurance is in force and the owner is provided with the certificate of insurance". Clause 25 of the contract concerned insurance. It included the following: "25.2 The above insurance policies must be in place before the builder commences the building work and must be maintained … … 25.6 If the owner asks for proof of any of the above insurance policies being in place the builder must give the owner a copy of the certificate of currency relating to the relevant insurance policy". 11 On 8 October 2001 HK requested Dexta for information of progress of the application. On the same day Dexta sought further financial information about the company. 12 On 10 October 2001 HK, in reply to Dexta's request, relevantly advised that the estimated contract values of $1,400,000.00 included work in respect of a six unit residential development at Ettalong, and a "$300,000.00 home at Newport, Sydney". 13 On 19 October 2001 Dexta sought further information from HK which included some details of the proposed residential project. The information was provided on 26 October 2001. 14 On 1 November 2001 Dexta sent the quotation to HK. The policy period was stated to be 12 months, and the retroactive date was 1 November 2001. Against the item for estimated contract values were the words: "$1,400,000.00 adjustable at expiry by applying the adjustment rate to the value of contracts entered into during the period of insurance". 15 In its reply to Dexta of 6 November 2001 HK requested a subrogation limit of $25,000.00 and the issue of six certificates at $183,000.00 and one at $300,000.00. 16 On 20 November 2001 Dexta sent HK the contractor's certificate of currency and the policy, each of which was dated that day. 17 The certificate referred in a summary way to the scope of the insurance cover under the policy. Relevantly it stated that a certificate complying with the relevant regulation would be issued in respect of "… each residential building contract entered into during the policy period". With reference to the provisions of Part B of the policy it specified the retroactive date as 16 November 2001. With reference to the policy period it stated: "Insures all major residential building work for which a contract is entered into during the period: 4pm 16 November 2001 until 4pm 16 November 2002". 18 The policy was a Contractor's 'Annual' Home Warranty Insurance Policy (New South Wales). It appears to meet the requirements for insurance for residential work under s 99(1), s 102, and s 103B of the Act. Under the section headed "In this Policy" it provides that all sections of the policy, including the schedule, are to be construed as one document. The relevant provisions of the policy are the following: The schedule defines the policy period as: "Commencing from 16 November 2001 to 16 November 2002 at 4pm". It states: "Estimated Total Contract Values during the Policy Period: $1,400,000.00". It includes the following: "Retroactive Date applicable to PART B: 16 November 2001 This policy shall ONLY provide "Run-Off" cover under PART B if the retroactive date precedes the commencement date of the Policy Period". The policy contains the following insuring provision: "In consideration of: (1) the Contractor requesting the Insurer to issue insurance to comply with the Act, and (2) the payment by the Contractor of the premium (and other charges) specified in the Schedule, the Insurer will, subject to the terms, conditions, limitations and exclusions of this policy (which are conditions precedent to the right of the Building Owner to recover hereunder), provide insurance cover as specified in PART A or PART B of this policy". Part A is headed "The Building Owner's Indemnity". It states that the insurer will indemnify the Building Owner for loss or damage in respect of residential building work resulting or arising from various circumstances including, under cl 4: "(4) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the Contractor's wrongful failure or refusal to complete the work;" The period of insurance is defined. It is: "The period commencing on the date the relevant contract is entered into and ending: (a) in respect of loss or damage arising from non-completion of the work, 12 months after the failure of the Contractor to commence the work or the cessation by the Contractor of the work, as the case may be; and (b) in respect of any other loss or damage for which this policy provides cover, the day seven (7) years from the completion of the work; or the end of the contract relating to the work, whichever is the later". Part B is headed "The Contractor's Responsibility". Clause 1 states: "(1) Unless stated otherwise in the Schedule, PART A of this policy shall indemnify the Building Owner under a contract entered into with the Contractor prior to commencement of this policy but after the retroactive date stated in the Schedule, on the terms and conditions of PART A of this policy. This PART B Subclause (1) shall not apply to any work which, at the date the Contractor first becomes aware, or might reasonably be expected to have become aware, of some fact or circumstance which may give rise to a claim, is insured under another policy of insurance issued in compliance with the Act". Under the section headed "Indemnity Limitations", cl 1 provides that the aggregate liability of the insurer is limited to $200,000.00 for all claims in respect of a dwelling. The section headed "General Conditions" includes the following provisions: "(2) The Contractor will issue, as agent of the Insurer, a Certificate in respect of Insurance required by Section 92(2) of the Act in the form contained in Schedule 1 of the Regulation evidencing a policy issued in compliance with the Act in respect of each home for which insurance is required upon request by the Contractor or Building Owner at any time. (3) If required by the Insurer, the Contractor shall supply to the Insurer copies of all Certificates in respect of Insurance issued in accordance with General Condition 2 and allow the Insurer to audit the relevant records of all contracts entered into during the Policy Period. (4) The Contractor will notify the Insurer immediately if the total of the contract sums specified in the contracts entered into during the Policy Period exceeds the estimated total contract value specified in the Schedule. The Contractor will immediately pay the additional premium required by the Insurer in respect of the additional estimated residential building work". The section headed "Definitions" includes the following: ""Building Owner" means the person for whom residential building work is being or is about to be carried out under a contract as defined in this policy … … "contract" means the contract or contracts entered into between the Contractor and the Building Owner for the carrying out of the work. … "Contractor" means the person named in the Schedule who enters into a contract with the Building Owner to do the work. … "Policy Period" means the period of the policy specified in the Schedule. … "Schedule" means the schedule of this policy". 19 On 21 November 2001 HK sent the company an invoice for the premium for the policy which included a summary of the cover provided. Relevantly, it stated that the policy covered: "All major residential building work for which a contract is entered into during the policy period" and that a certificate in accordance with the relevant regulation "… will be issued in respect of each residential building contract entered into during the policy period" The retroactive date was stated to be "16 November 2001". 20 On 23 November 2001 HK sent to the company via its accountant, Mr A Vicaretti a letter in the following terms: "Policy Class: Builders Warranty Insurance Policy Period: 16th November 2001 to 16th November 2002 We have placed cover on your Builders Warranty Insurance with Dexta Corporation in accordance with your instructions and now enclose the original policy document and building certificates for your attention. You require these documents in order to meet your legal obligations. It is necessary that you check and review the attached document paying particular attention to the terms, conditions and exclusions. Should you disagree with any of the details shown please contact our office immediately. Any changes in circumstances which could affect this insurance during the period of cover should be reported to us immediately so that we may advise the underwriter. We thank you for placing your insurance through our office and we would be pleased to assist with any future insurance requirements". 21 On about 23 November 2001 Mr Monti gave the plaintiff a copy of the certificate of currency and of the certificate in respect of insurance under s 92 of the Act (the owner's certificate). The last mentioned certificate is headed: "Building Owner's Home Warranty Insurance Certificate No. BAN 998-DA002267-01/1/7". Immediately under the heading is the following: "Important Notice This Certificate is issued to comply with the relevant law and MUST be signed by the contractor and the Insurer (or its agent). This ORIGINAL CERTIFICATE must be retained as evidence of the insurance, which is provided under an annual policy issued to the contractor. The terms, conditions and exclusions of the insurance relevant to the Building Owner are set out in the attached policy wording. This Certificate is ONLY VALID for a contract entered into by: Montcom Group Pty Ltd (A.C.N. 094 230 869) dated between 16 November 2001 and 16 November 2002 and where the contact value is less than $300,000. This certificate applies to one dwelling ONLY and relates to a Residential Building Contract dated ……………………………. The contract price for the work is $…………………….. Variations of up to 10% of the contract price are automatically included. The estimated construction period is from ………………………… to ……………………….". The certificate includes a section for the description of the work and nomination of the site address. This section was left blank. 22 On about 27 November 2001 the building work commenced at the property. 23 On 18 October 2002 HK sent Dexta the form headed "Declaration of Contracts Entered into During Policy Period" as completed by the company. The letter said that the declaration confirmed the status of current work. Although the information provided in the form related to the six unit development at Ettalong and the residential building work for the plaintiff, it did not include the date of the relevant contracts. 24 In her letter of 3 December 2002 to the company the plaintiff alleged that it was in breach of the contract dated 27 September 2001. She stated that failing resolution of matters in dispute she would terminate the contract, lodge a complaint to the Department of Fair Trading, and make a claim under the policy. The next day work ceased, and the company left the site. 25 On 15 January 2003 the plaintiff submitted to Dexta a claim under the policy with, inter alia, a copy of the building contract of 27 September 2001. At the same time she applied to the Consumer, Trader & Tenancy Tribunal for an order against the company under the Act. 26 By letter of 23 April 2003 Dexta informed the plaintiff that the claim was denied on the basis that the contract was outside the policy period. After review at the plaintiff's request the decision to decline liability under the policy was confirmed as advised in the letter of 1 May 2003 from Dexta to the plaintiff. Construction of the policy 27 The proper approach to the construction of the policy accepts that as it is a commercial contract it should be given a business-like interpretation. Its interpretation requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure. McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, p 589. As with other instruments, preference is given to a construction supplying a congruent operation to the various components of the whole. Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355, pp 381-382; Wilkie v Gordian Runoff Ltd [2005] HCA 17, paras 15-16. In this case the policy and the schedule are to be construed as one document. 28 The question which arises in these proceedings is whether Allianz was entitled to deny indemnity to the plaintiff on the basis that the building work was carried out under a contract which predated the policy period. 29 For the plaintiff it was submitted that upon its proper construction the policy covers a contract for which a premium has been paid to the insurer whether or not it was entered into during the policy period. Reliance was placed upon the definition of the period of insurance in Part A which is stated to commence on the date the relevant contract is entered into and, in terms, makes no reference to contracts entered into during the policy period. It was pointed out that the term "contract" is defined to mean the contract entered into between the contractor and the building owner for the carrying out of the work and, so defined, does not require that it be entered into during the policy period. 30 It was argued that support for this construction is to be found in some of the provisions under the section headed "General Conditions". It was submitted that clauses (2), (3) and (4) evidence the intention that a premium is to be paid in respect of all contracts entered into, whether within the policy period or not. Thus it was put that clauses (3) and (4), together provide a mechanism for checking that the total amounts of contracts entered into does not exceed the amount on which premium has been paid, and for supplementing premium already paid if additional contracts are entered into. 31 With reference to the schedule, it was put that it was relevant that the contract referred to in the description of the building owner (similar to the definition of "Building Owner" in the body of the policy) is not expressed to be limited to one entered into during the policy period. It was also put that the statement in the schedule of the estimated total contract values as $1,400,000.00 was based upon information as to the estimated values of contracts provided by the company prior to the issuing of the policy, and was the sum upon which the premium was calculated. Thus it was put that the contract referred to as "the relevant contract" within the definition of the period of insurance in Part A should be understood as one in respect of which a premium had been paid to the insurer. 32 It was argued that these matters demonstrate that the purpose of the policy was to provide insurance in respect of contracts for which the premium had been paid irrespective of the date on which they were entered into. It was submitted that it therefore followed that in this case the relevant contract, being one for which the premium was paid, is that dated 27 September 2001 which is also to be taken as the commencement date of the period of insurance under the policy. Accordingly, Allianz was not entitled to decline indemnity. 33 The submissions for the defendants may be summarised as follows. Under the insuring provision insurance cover is provided as specified in Part A or Part B of the policy. It is self-evident that Part A specifies the risks and losses for which indemnity is provided to the building owner. Also specified is the period during which the insurance operates which is measured with regard to whether the loss arises from non-completion of the work or is in respect of other loss covered by the policy. 34 Clause (1) of Part B provides: "(1) Unless stated otherwise in the Schedule, PART A of this policy shall indemnify the Building Owner under a contract entered into with the Contractor prior to commencement of this policy but after the retroactive date stated in the Schedule, on the terms and conditions of PART A of this policy. This PART B Subclause (1) shall not apply to any work which, at the date the Contractor first becomes aware, or might reasonably be expected to have become aware, of some fact or circumstance which may give rise to a claim, is insured under another policy of insurance issued in compliance with the Act". As it was common ground in this case that the second paragraph of cl (1) does not apply, the operation of the first paragraph is unqualified. 35 It was put that, upon its proper construction, the effect of the first paragraph of cl (1) is to specify the relevant contract in respect of which the indemnity is provided under Part A, which includes the period for which the insurance is provided. Such a contract is expressed to be one entered into "… prior to commencement of this policy but after the retroactive date stated in the Schedule …". The reader is directed to the schedule in which these points of time are identified. In this case, the commencement date and the retroactive date are the same, namely 16 November 2001. It therefore follows that a building contract entered into prior to the retroactive date is not one in respect of which the building owner is entitled to indemnity under Part A. Accordingly, the plaintiff has no entitlement to indemnity under the policy with respect to the contract entered into on 27 September 2001. 36 For the defendants it was pointed out that other parts of the schedule manifest the intention that insurance was to be provided only in respect of contracts entered into during the policy period. The amount of $1,400,000.00 is described as the "Estimated Total Contract Values during the Policy Period" which description may reasonably be understood as referring to values of contracts entered into within the policy period. Furthermore, the statement with reference to the application of the retroactive date that "This policy shall ONLY provide "Run-Off" cover under PART B if the retroactive date precedes the commencement date of the Policy Period" is plainly consistent with that intention. Finding 37 I accept the defendants' submissions. In my opinion, upon its proper construction, the first paragraph of cl (1) of Part B provides the mechanism for the identification of the contract for which the insurer is liable to provide indemnity under Part A. The exercise is undertaken with reference to the commencement date and to the retroactive date specified in the schedule. In this case the dates are the same, namely 16 November 2001. As the contract in this case was entered into not only prior to the commencement of the policy but also prior to the retroactive date it is not a contract within the meaning of the first paragraph and hence the obligation to indemnify does not arise. It follows, in my opinion, that Allianz was entitled to deny the plaintiff's claim. Rectification 38 In the alternative the plaintiff sought rectification of the policy period specified in the schedule so that the commencement date be altered by substituting 27 September 2001 for 16 November 2001. In the further alternative, rectification was sought that the retroactive date stated in the schedule be altered by substituting 27 September 2001 for 16 November 2001. It was contended that such rectification was necessary in order to give effect to the common intention of the parties to the insurance contract. The plaintiff claimed to be entitled to this relief as a beneficiary under the policy although, obviously, she was not a party to the insurance contract. 39 A recent summary of the relevant principles is provided by White, J in Muriti v Prendergast [2005] NSWSC 281 as follows: "105 Rectification on the basis of the parties' common intention requires proof that at the time when the contract was executed, both parties had an intention to include in their agreement, a term which, by mutual mistake, was omitted from the agreement, or not properly expressed. ( Pukallus v Cameron (1982) 180 CLR 447 at 452, 456; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350-351). The alleged common intention must be established "in the clearest and most satisfactory manner" ( Fowler v Fowler (1859) 4 De G & J 250 at 265; 45 ER 97 at 103; Australian Gypsum Ltd & Australia Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 65; Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 at 669; Joscelyne v Nissen [1970] 2 QB 86 at 98; The Olympic Pride [1980] 2 Lloyd's Rep 67 at 73; Pukallus v Cameron at 452.) … 109 … In Pukallus v Cameron (at 452) Wilson J said that so long as there is a continuing common intention of the parties, it may not be necessary to show that the accord found outward expression. (See also Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 335-6). `However, in many cases, including the present, such objective evidence of the parties' intentions will be necessary, as a practical matter, to provide the clear and convincing evidence of the parties' intentions sufficient to displace the presumption that they intended to be bound by the agreement expressed in the document which they signed". 40 No evidence was relied upon as to the subjective intention of the parties. The plaintiff sought to prove the expression of common intention by reference to the correspondence between the agents of the parties relevant to the issuing of the policy, as well as to other documents. 41 The plaintiff contends that the documentation evidences a common intention that seven contracts, including the plaintiff's contract, would be insured. She relies upon the defendants' admission that the company applied to Dexta for a home warranty insurance policy in respect of, inter alia, building work to be carried out at the property, and that the relevant premium was calculated with regard to estimated values a component of which was the estimated value of the work to be done for the plaintiff. 42 It was put that relevant documents included the company's application of 10 September 2001 in which the estimated number of jobs for the next 12 months was stated to be seven with a total value of $1,400,000.00. On 10 October 2001 HK advised Dexta that this estimate included work in respect of a six unit residential development at Ettalong Beach, and $300,000.00 for the work for the plaintiff. On 26 October 2001 HK advised Dexta that the value of each unit at Ettalong Beach was $183,000.00. Thereafter, until the policy was issued on 20 November 2001, information was provided to Dexta in accordance with its requests. No information was sought or given as to the dates of contracts entered into. The plaintiff placed reliance on Dexta's quotation of 1 November 2001 to HK in which was noted the estimated contract values at $1,400,000.00. The quotation offered premium options and advised that no further information was required for underwriting purposes. HK replied on 6 November 2001 with the request for a subrogation limit of $25,000.00, and for the issue of certificates "6 x $183,000.00" and "1 x $300,000.00". 43 In summary, the plaintiff submitted that the documentation leading up to the issue of the policy on 20 November 2001 evidences the company's request for insurance for work to be carried out under contracts in respect of six units at Ettalong and the house at Newport, and that the premium was calculated on the basis of the estimated value of these contracts. It was pointed out that the correspondence between HK and Dexta did not refer to dates of contracts, or to the commencement date of the policy, or to a retroactive date so that there was nothing to show an intention that the policy period would be fixed to commence on 16 November 2001 without regard to the dates of contracts already entered into. The thrust of the submissions was expressed by plaintiff's counsel (T p 152) this way: "The common intention was to include the subject of the contract entered into between my client and Montcom on 27 September 2001, the common intention of the insurer and builder that that would be covered … I accept that the insurer was not made aware until well after the events of the date of the contract. But in my submission the dates of contract were not of significance for either the insurer or the contractor. The significance was the value of the work and the value of the work was ascertained for the Newport property and a premium was paid in respect of that work". Thus it was put that the evidence justified the finding that it was the common intention of the parties to the insurance contract that Allianz would provide indemnity in respect of the seven works including the plaintiff's, and the schedule and policy should be rectified to record that agreement. 44 Counsel for the defendants first submitted that the plaintiff had no standing to seek an order for rectification as she was not a party to the contract for insurance. He referred to Brunker v Perpetual Trustee (1937) 59 CLR 140. However his main submissions were directed to demonstrate the lack of evidence of a common intention to provide insurance in respect of the plaintiff's contract. 45 He submitted that the correspondence prior to the issue of the policy should be understood to have proceeded on the basis of the truth of the representations in the application of 10 September 2001 that no contract had been entered into, and that the company would advise if circumstances changed. Consistently, the correspondence makes plain that the parties treated the values as estimates in circumstances where no information was provided by the company of contracts entered into and of actual contract values. It was said that a relevant example is the facsimile of 6 November 2001 in which HK responds to Dexta's quotation and requests the issue of certificates in respect of the works. It is noteworthy that those works are identified only by estimated values; the insurer is not informed of the date of the contracts under which the works were to be done. 46 The defendants also relied upon the acceptance by the company, without demur, of the certificates and policy documents which were sent to HK by Dexta on 20 November 2001 after the policy was issued and in which, inter alia, were included statements to the effect that insurance was in respect of contracts entered into during the policy period, and that the retroactive date was 16 November 2001. They also rely on HK's letter of 23 November 2001 in which the company was advised to check the policy and certificates and to notify disagreement with any details, and the apparent lack of response to it. Finding 47 In considering the rectification issue I have assumed, without deciding, that the plaintiff has standing to seek the relief claimed. 48 In order to succeed the plaintiff undertook to provide clear and convincing evidence that both the company and the insurer intended that the policy period should commence on 27 September 2001, alternatively that this date be the retroactive date, thereby entitling the plaintiff to indemnity. Thus it was for the plaintiff to prove that the policy did not express the agreement of the parties. 49 In my opinion the documentary evidence negates the basis of the plaintiff's claim, and makes plain the agreement of the parties was as expressed in the terms and conditions of the schedule and the policy and, accordingly, the claim for rectification should be declined. 50 The correspondence shows that Dexta acted in accordance with the information provided in the application of 10 September 2001 and, absent information otherwise, was entitled to assume that the contracts for which estimated values were stated had not been entered into prior to the time the policy was issued. The plaintiff accepts that the insurer was not made aware of the date of the plaintiff's (or of any) contract until well after the policy was issued. She made no submission that the policy was inconsistent with the application or other information provided by the company. 51 To demonstrate the company's agreement with the terms and conditions of the policy it is sufficient to refer to the following. 52 On 20 November 2001 Dexta sent to HK the contractor's certificate of currency and the schedule. Later the same day it sent by separate post the certificate of currency and the policy documentation, the relevant details of which are set out in paras 17 and 18 above. On or about 21 November 2001 HK sent a policy summary and tax invoice for the premium for the policy, the details of which are set out in para 19 above. The documents state plainly that the period of cover is from 16 November 2001 to 16 November 2002, and that the insurance covers all major residential building work for which a contract is entered into during the policy period. The retroactive date is stated to be 16 November 2001. It is common ground that the premium was paid. 53 On 23 November 2001 HK sent, for Mr Monti's attention, the certificate of currency noting that the policy was effective from 16 November 2001. On the same day it sent to the company the letter the terms of which are set out in para 20 above. Significantly, the letter records that the cover was placed in accordance with the company's instructions, and advises of the necessity to check and review the policy paying particular attention to its terms, conditions, and exclusions. It invited immediate notification of disagreement with any details. 54 As indicated in the letter, these documents were required before the company could lawfully proceed with building work under the Act. Relevantly, s 92(1) provides: "92(1) A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case". 55 According to the plaintiff, on about 23 November 2001 Mr Monti gave her a copy of the certificate of currency and of the owner's certificate. The details of the owner's certificate are set out in para 21 above. There is no reason to think that he did not read and understand them. By providing the certificate to her he purported to fulfil the requirement of s 92(1)(b) of the Act and cl 25.6 of the contract with the plaintiff. Apparently on the assumption that it held a contract of insurance which complied with the Act which was in force in relation to that work as required by s 92(1)(a) of the Act and cl 25.2 of the contract the company commenced work at the property a few days later. 56 These matters establish, in my opinion, the acceptance by the company of the terms and conditions of the policy, and that the schedule and policy accurately recorded the agreement of the parties to the insurance contract at the time it was made. In the circumstances there can be no rational basis for doubting that Mr Monti and other relevant officers of the company were aware of, and accepted, that the policy period commenced on 16 November 2001, that the insurance for which the premium was paid covered contracts entered into during the policy period, and that the retroactive date was 16 November 2001. The company's agreement is further demonstrated by Mr Monti's conduct in providing the plaintiff with the owner's certificate in purported discharge of its statutory and contractual obligations, and commencing work at the property. 57 Furthermore, it is the inevitable inference from the conduct of the company in doing or saying nothing thereafter to suggest otherwise that it accepted the policy as a valid contract with the insurer. 58 There is nothing in the evidence which indicates that the insurer intended to cover a contract entered into outside the policy period. This is not surprising as it was never informed by the company that there existed such a contract for which insurance was sought. Thus it came about that the policy documents which specified the policy period for contracts in respect of which cover would be provided were submitted to the company for its consideration. These were the terms and conditions which the company accepted and acted upon. For the above reasons I am unpersuaded that the evidence relied upon by the plaintiff provides any support for an order for rectification of the schedule and policy as sought. This conclusion makes it unnecessary to decide the question of the plaintiff's standing. The application for judgment under Pt 18, r 3 59 Part 18, r 3(1) provides: 3(1) Where admissions are made by a party, whether by his pleading or otherwise, the Court may, on the application of any other party, give any judgment or make any order to which the applicant is entitled on the admissions". 60 The plaintiff submitted that she was entitled to judgment on the admissions contained in the defence to the second further amended statement of claim. The application was left until after the defendants' counsel had completed his submissions on the construction and rectification issues (T p 134). It was submitted that the effect of the admissions precluded denial of liability of the plaintiff's claim for indemnity, regardless of the proper construction of the terms and conditions of the policy. It was put that the plaintiff was entitled to a verdict on the following admissions recorded in Exhibit C. 3(b) The Builder obtained a policy of Home Warranty Insurance from Dexta, for and on behalf of Allianz, on or about 16 November 2001 in respect of the building work to be carried out at Ms Taylor's property ('the Building Works') (Para 10 claim, 11 defence) (c) Dexta, on behalf of Allianz issued Building Owner's Home Warranty Insurance Certificate No BAN998-DA002267-01/1/7 dated 16 November 2001 in respect of the Building Works; ('the Certificate') (paras 10, 13 & 15(e) claim, paras 11, 15 & 26 defence)". 61 It is unnecessary to recite the competing submissions in these reasons. They demonstrated that there was a substantial issue concerning the proper construction of numerous paragraphs in the second further amended statement of claim and of the responses to them as pleaded in the defence. Nevertheless, the effect of the denials pleaded left no doubt that the defendants' denied the plaintiff's entitlement to indemnity or rectification on the bases upon which this litigation was conducted. (See eg, paras 14, 16, 22, 24, 28, 29, 33, 36, 37, 53, and 55 of the defence). 62 The power which may be exercised under Pt 18, r 3 is discretionary having regard to the requirements of justice in all the circumstances of the particular case. A party is not entitled as of right to judgment on admissions even in cases where the terms of the admissions are expressed in clear terms or where the fact of them having been made is not in issue. The principles were reviewed in Termijtelen v van Arkel & Anor (1974) 1 NSWLR 525 pp 528-530; pp 532-534. Hope, JA (p 529) expressed the view that if evidence is properly before the court in the same suit the court can act upon the basis of that evidence and refuse to act upon the admissions. Both Hope, JA (p 530) and Bowen, CJ in Eq (p 534) referred with approval to the speech of Lord Loreburn in Gramophone Company Ltd v Magazine Holder Co (1911) 28 RPC 221 p 225 in which he held: ""It is the duty of a Court to decide cases according to the truth and fact, not according to any assumed or artificial state of facts which the parties G may find it convenient to present. No doubt Courts of Law allow and indeed encourage parties to simplify litigation by making admissions and to a certain extent by waiving their rights, because, when there is a real controversy depending upon real facts, everyone ought to facilitate its authoritative settlement. But that is a very different thing from allowing people to obtain A an adjudication upon the footing that something exists or has happened which in truth does not exist, or has never happened ¼ . A Court of Justice can never be bound to accept as true any fact, merely because it is admitted between the parties"." 63 In Damberg v Damberg & Ors [2001] NSWCA 87, Heydon, JA (para 155) observed that there are significant limitations on the extent to which the use of admissions can compel a court to decide a case on a basis contrary to fact. He, too, referred with approval to Lord Loreburn's statement in support of the proposition that the court is not bound to act on admissions made by the parties or on states of fact agreed by the parties (para 157). Finding 64 In my opinion the proper exercise of discretion requires that the application for judgment be refused. Although it is evident that some of the admissions relied upon may be agreements as to identified facts and limits the need for evidence to prove them, it is also plain from the pleading itself that matters relevant to the core of the plaintiff's claim remained in contest. This being the case, it is unnecessary to endeavour to resolve the issues as to which matter or matters were in fact admitted as claimed. Unsurprisingly, the plaintiff accepted the necessity to prove her case and proceeded to trial in an attempt to do so. Relevantly, although the defence was filed on 7 June 2005, and the hearing commenced on 27 June 2005 and proceeded on the basis that the claim was opposed on all grounds, no application was made until 29 June 2005 after completion of the defendants' final submissions. In my opinion those circumstances are sufficient to justify refusal of the application. 65 Significant additional factors are the conclusions to which I have come on the questions of construction and rectification which inevitably attract the considerations to which Lord Loreburn referred. Having found that upon the proper construction of the policy the plaintiff is not entitled to indemnity, and having declined rectification of the policy documents, in my opinion it would be unjust to make an order to the opposite effect on the basis of the defendants' pleaded admissions. Conclusion 66 I make the following orders: (1) There be verdict and judgment for the defendants. (2) That the plaintiff pay the defendants' costs. 67 I direct the defendants to inform the court as to the future conduct of the cross-claim. If necessary, arrangements to re-list the matter should be made with my associate on or before 4pm 5 October 2005. ********** 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.