New South Wales Supreme Court CITATION : Towry Law v Chubb Insurance [2008] NSWSC 1352 HEARING DATE(S) : 15/09/08, 16/09/08, 17/09/08, 18/09/08, 19/09/08, 22/09/08, 23/09/08, 24/09/08, 25/09/08, 1/10/08, 2/10/08, 3/10/08 JUDGMENT DATE : 19 December 2008 JUDGMENT OF : McDougall J at 1 DECISION : See paras [245] to [246] of the judgment. CATCHWORDS : INSURANCE - Insurance contract - construction and interpretation - objective intention of the parties - contract must be considered as a whole. - EQUITY - Equitable remedies - mistake - rectification - common contractual intention. - EQUITY - Conventional estoppel - adoption of mutual assumption - inducement of assumption - reliance - detriment - whether parol evidence rules excludes evidence of pre-contractual negotiations in proving conventional estoppel. LEGISLATION CITED : Evidence Act 1995 Insurance Contracts Act 1984 (Cth) Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 Coghlan v SH Lock (Australia) Ltd (1985) 4 NSWLR 158 Commissioner of Stamp Duties NSW v Carlenka Pty Ltd (1995) 41 NSWLR 329 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2006] QCA 194 Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No.4) [2006] NSWSC 90 CASES CITED : Johnson Matthey Ltd v AC Rochester Overseas Corporation (1990) 23 NSWLR 190 Kaye Lokumal & Sons (London) Ltd v Lotte Shipping Co Pty Ltd (the "August Leonhardt") [1985] 2 Lloyds LR 28 MK and JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 Moratic Pty Ltd v Gordon (2007) Australian Contract Reports 90-255 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 461 – 462 [22] Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Thompson v Palmer (1933) 49 CLR 507 Touche Ross and Co v Baker [1992] 2 Lloyds Rep [207] Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 TEXTS CITED : Australian Oxford Dictionary (second edition, 2004) Estoppel by Conduct and Election (Thompson Sweet and Maxwell, 2006) Towry Law PLC (Plaintiff) UKFP (Asia) HK Limited (Second Plaintiff) Henderson Group PLC (Third Plaintiff) Chubb Insurance Company of Europe SA (First Defendant) CNA Insurance Company Ltd (Second Defendant) ACE European Group Ltd (Third Defendant) Zurich Specialties London Ltd (Fourth Defendant) Great Lakes Reinsurance (UK) PLC (Fifth Defendant) St Paul Travelers Casualty & Surety Company of Europe Ltd (Sixth Defendant) New Hampshire Insurance Company (Seventh Defendant) Bestpark International Ltd (Eighth Defendant) The Underwriter Insurance Company Ltd (Ninth Defendant) Wurttembergische Versicherung AG (Tenth Defendant) Assicurazioni Generali Spa (Eleventh Defendant) PARTIES : Newline Corporate Name Ltd (Twelfth Defendant) Oak Dedicated Ltd (Thirteen Defendant) Jago Capital Ltd (Fourteenth Defendant) Catlin Syndicate Ltd (on its own behalf and representing all members of Lloyd's syndicate 1003) (Fifteenth Defendant) Catlin Syndicate Ltd (on its own behalf and representing all members of Lloyd's Syndicate 2003) (Sixteenth Defendant) RG Wasey (on his own behalf and in a representative capacity on behalf of Lloyd's Syndicate 1047)(Seventeenth Defendant) Camperdown UK Ltd (Eighteenth Defendant) Limit (No.3) Ltd (Nineteenth Defendant) Amlin Corporate Member Ltd (on its own behalf and representing all members of Lloyd's Syndicate 2001) (Twentieth Defendant) SVB Syndicates Ltd (in a representative capacity on behalf of all members of Lloyd's Syndicate 1241) (Twenty First Defendant) SVB Syndicate Ltd (in a representative capacity on behalf of all members of Lloyd's Syndicate 1007) (Twenty-Second Defendant) ACE Underwriting Agencies Ltd (in a representative capacity on behalf of all members of Lloyds Syndicate 2488) (Twenty-Third Defendant) Mark John Harrington (on his own and representing all members of Lloyd's Syndicate 0079) (Twenty-Fourth Defendant) Liberty Syndicate Management Ltd (on behalf of all members of Lloyd's Syndicate 0190) (Twenty-Fifth Defendant) Dornoch Ltd (on its own and in a representative capacity of all members of Lloyd's Syndicate 1209) (Twenty-Sixth Defendant) Old Faithful Underwriting (on its own behalf and representing all members of Lloyd's Syndicate 861) (Twenty-Seventh Defendant) FILE NUMBER(S) : SC 50183/05 COUNSEL : M A Pembroke SC / T M Mehigan (Plaintiffs) A J Meagher SC / R J H Darke SC / G K J Rich (Defendants) SOLICITORS : Allens Arthur Robinson (Plaintiffs) Deacons Lawyers (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST McDOUGALL J 19 December 2008 50183/05 TOWRY LAW PLC & ORS v CHUBB INSURANCE COMPANY OF EUROPE SA & ORS JUDGMENT 1 HIS HONOUR: These proceedings concern a composite Lloyds policy of insurance number 823/9901238 (the policy). The named "Assured" in that policy was AMP Limited (AMP). The policy was underwritten by the first to third and fifth to twenty-seventh defendants in stated separate proportions. The period of insurance ran from 31 December 1999 to 31 December 2002. 2 By endorsement number 8 to the policy, the period of insurance was extended by a year, to 31 December 2003. Not all underwriters agreed to the extension. There was accordingly a shortfall in cover for the further year. The fourth and fifth defendants issued a "shortfall policy" number FB0201854, whereby they agreed to underwrite some (but not all) of that shortfall for the further year. 3 The plaintiffs became subsidiaries of AMP at various times during the original period of insurance. They claim to fall within the definition of "Assured" in the policy (which definition applies also to the shortfall policy). They assert an entitlement to be indemnified under the policies in respect of certain claims made against the second plaintiff. Those claims arise out of matters that occurred before the second plaintiff became a subsidiary of AMP. There is a dispute between the plaintiffs and the defendants as to whether, upon the true construction of the policy (for convenience, I will in general refer to "the policy", on the basis that its terms are incorporated into the shortfall policy) and in the events that have happened, the defendants are obliged to indemnify the plaintiffs. In broad outline, that dispute involves three fundamental issues: (1) The proper construction of the relevant provisions of the policy: including, in particular, general condition 12(B). That is the term of the policy whereby, on certain conditions, "acquisitions made by [AMP] will be automatically covered by this Policy…". In particular, the debate turns on a sentence in general condition 12(B): "The Retroactive Date in respect of the acquisition to be the date of acquisition or to be agreed by Underwriters." (2) If the question of construction is resolved in favour of the plaintiffs, the defendants say that the policy, so construed, does not represent the common intention of the parties, and that it should be rectified in substance to provide that a company acquired by AMP during the period of insurance is not entitled to be indemnified in respect of claims arising out of events that occurred before the date of acquisition unless the defendants expressly agree otherwise. (3) Alternatively, the defendants say that they and AMP conducted themselves on the basis that the policy, regardless of its proper construction, had the effect just stated, so that a conventional estoppel arises. The defendants say that they would suffer detriment if the plaintiffs were now permitted to assert rights inconsistent with the terms of the conventional assumption on which the defendants and AMP had conducted their affairs. The questions for decision 4 The parties formulated some sixteen questions arising out of the broad issues that I have just outlined. The Court ordered that those questions be determined separately from and before the determination of any other questions arising in the proceedings. Those questions, somewhat modified to take account of amendments to the "pleadings" after the order for separate and prior determination was made, are as follows: 1. Upon the true construction of the Policy, does General Condition 12(B) operate to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 14 and 24(a) of the Second Further Amended Cross Claim dated 26 August 2008 ( Cross Claim ) and paragraphs 4 and 11 of the Defence to the Second Further Amended Cross Claim dated 12 September 2008 ( Defence to Cross Claim )). 2. If the answer to question 1 is no, should General Condition 12(B) of the Policy be rectified so that it operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 16 to 18, 21, 23 and 24(c) of the Cross Claim and paragraphs 5 to 7 and 10 to 11 of the Defence to Cross Claim). 3. If the answer to questions 1 and 2 is no, is the Cross Defendant estopped from denying that General Condition 12(B) of the Policy operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 1 to 21A and 37 to 38 of the Reply to the Defence to the Further Amended Cross Claim dated 26 August 2008 ( Cross Claimants' Reply )). 4. Does General Condition 12(B) of the Policy, upon its true construction or as rectified, operate to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of the Policy? (As more particularly set out in paragraph 22(d)(i) of the Further Amended Commercial List Response dated 26 August 2008 ( Response to Summons )). 5. If the answer to question 4 is no, are the Plaintiffs estopped from denying that General Condition 12(B) of the Policy operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of the Policy? (As more particularly set out in paragraphs 22(d)(ii), 30 to 49A and 64 to 68 of the Response to Summons and paragraphs 9 to 13A and 14 of the Plaintiffs' Amended Reply dated 12 September 2008 ( Plaintiffs' Reply )). 6. Upon the true construction of the Shortfall Policy, does General Condition 12(B) operate to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Shortfall Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 15 and 24(b) of the Cross Claim and paragraphs 4 and 11 of the Defence to Cross Claim). 7. If the answer to question 6 is no, should the Shortfall Policy be rectified so that it operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Shortfall Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 19 to 20, 22 to 23, and 24(c) and (d) of the Cross Claim and paragraphs 8 to 11 of the Defence to Cross Claim). 8. If the answer to questions 6 and 7 is no, is the Cross Defendant estopped from denying that General Condition 12(B) of the Shortfall Policy operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition or such other date as may be agreed by Underwriters) on any cover provided under Section IV of the Shortfall Policy to a Subsidiary acquired after 31 December 1999? (As more particularly set out in paragraphs 1 and 22 to 38 of the Cross Claimants' Reply). 9. Does General Condition 12(B) of the Shortfall Policy, upon its true construction or as rectified, operate to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of the Shortfall Policy? (As more particularly set out in paragraph 22(d)(i) of the Response to Summons and paragraph 8 of the Plaintiffs' Reply). 10. If the answer to question 9 is no, are the Plaintiffs estopped from denying that General Condition 12(B) of the Shortfall Policy operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of the Shortfall Policy? (As more particularly set out in paragraphs 22(d)(ii) and 50 to 68 of the Response to Summons and paragraphs 9, 13 and 14 of the Plaintiffs' Reply). 11. If the answer to any of questions 1 to 10 is yes, on what date did each of the First and Second Plaintiffs become a Subsidiary of the Cross Defendant? (As more particularly set out in paragraph 36 of the Second Further Amended Summons dated 16 March 2007 ( Summons ) and paragraph 10(a) and 10(c) of the Response to Summons). 12. Are any (and, if so, which) of the Eleventh, Seventeenth and Twenty-Fourth Defendants bound by Endorsement 8 to the Policy? (As more particularly set out in paragraph 32 of the Summons, paragraph 6(c) and 6(d) of the Response to Summons). 13. (a) Are any (and, if so, which) of the Eleventh, Seventeenth and/or Twenty-Fourth Defendants party to a statutory contract, arising under section 58(3) of the Insurance Contracts Act , which provides cover in respect of any period after 31 December 2002? (b) If the answer to (a) is yes, when did the period in respect of which cover was provided under any such statutory contract expire? (As more particularly set out in paragraph 2 of the Plaintiffs' Reply). 14. If the answer to question 13(a) is yes, does General Condition 12(B) of any such statutory contract, upon its true construction or as rectified, operate to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of any such statutory contract? (As more particularly set out in paragraph 22(d)(i) of the Response to Summons and paragraphs 2 and 8 of the Plaintiffs' Reply). 15. If the answer to question 14 is no, are the Plaintiffs estopped from denying that General Condition 12(B) operates to impose a retroactive date exclusion or limitation (the retroactive date being the date of acquisition) on any cover provided to the First and Second Plaintiffs under Section IV of any such statutory contract? (As more particularly set out in paragraphs 22(d)(ii), 30 to 49A and 64 to 68 of the Response to Summons and paragraphs 9 to 13A and 14 of the Plaintiffs' Reply). 16. Are the Defendants entitled to: (a) declaration to the effect claimed in paragraph 24(a) of the Cross Claim; (b) a declaration to the effect claimed in paragraph 24(b) of the Cross Claim; (c) an order to the effect claimed in paragraph 24(c) of the Cross Claim; (d) an order to the effect claimed in paragraph 24(d) of the Cross Claim; (e) a declaration to the effect of paragraph 38 of the Cross Claimants' Reply; (f) a declaration to the effect of paragraph 22(d)(i) of the Response to Summons; and/or (g) declarations to the effect of paragraphs 22(d)(ii), 65 and/or 67 of the Response to Summons. NOTE : The 16 questions set out above are in the same terms as the questions which have been ordered to be determined separately and in advance of all other issues in the proceedings, save that: In question 7 the words "General Condition 12(B) of" have been deleted from the first line. In question 16 a new paragraph (d) has been added. These alterations have been made as a consequence of the amendments recently made to the pleadings in connection with the claim for rectification of the Shortfall Policy. The references to the applicable paragraphs of the pleadings have also been altered where necessary to take into account the various amendments recently made. 5 Question 12 arises because the defendants named in it assert that they did not scratch, or otherwise become bound by, endorsement 8: the endorsement whereby the period of insurance was extended from three to four years, expiring on 31 December 2003. If question 12 is answered in favour of those defendants, then question 13 becomes relevant. The plaintiffs assert that the insurance cover offered by the policy was "renewable insurance cover" as defined in s 58(1) of the Insurance Contracts Act 1984; that the defendants in question did not give notice of the kind referred to in s 58(2); and that in those circumstances, the plaintiffs are entitled, as against those defendants, to the benefit of a statutory contract of insurance in accordance with s 58(3). 6 To make question 16 a little more comprehensible, I set out the paragraphs of the "pleadings" to which they refer: 24(a) A Declaration that, on the proper construction of the Policy, General Condition 12(B) operates to impose a retroactive date exclusion, whereby, unless specifically agreed otherwise at the time of acquisition, any insurance cover provided under Section IV of the Policy to an entity acquired after 31 December 1999 excludes claims arising from circumstances which occurred before the date of acquisition. 24(b) A Declaration that, on the proper construction of the Shortfall Policy, General Condition 12(B) operates to impose a retroactive date exclusion, whereby, unless specifically agreed otherwise at the time of acquisition, any insurance cover provided under Section IV of the Policy to an entity acquired after 31 December 1999 excludes claims arising from circumstances which occurred before the date of acquisition. 24(c) Alternatively, an Order that the Policy and the Shortfall Policy be rectified by adding the two underlined words and two underlined letters, and by deleting the word and two capital letters that are struck through, in General Condition 12(B), as set out below: " Notwithstanding sub-clause (i) of Section A of this General Condition, acquisitions made by the Assured will be automatically covered by this Policy on terms and conditions to be agreed by Underwriters and subject to advice to Underwriters within 60(sixty) days of acquisition, provided that: (a) the employees of any such acquisition do not exceed the number expressed in Item 15(A) of the Schedule, and (b) total assets do not exceed the amount expressed in Item 15(B) of the Schedule, and (c) no loss, of the type covered by this insurance greater than the amount expressed in Item 15(C) of the Schedule has been sustained in the last five years by the company acquired. 24(d) Further to paragraph (c) above, an Order that the Shortfall Policy be rectified by adding the words and numbers marked in bold to General Definition 2, as set out below: "'Assured' means: (i) the Assured named and stated in Item 2 of the Schedule to this Policy; and/or (ii) any Subsidiary Company or Companies as at inception of the policy period expressed in the Schedule; and/or any Subsidiary Company or Companies constituted or acquired thereafter:… provided that the inclusion in this insurance of companies acquired by the Assured subsequent to the commencement of the Policy Period stated in Item 3 of the Schedule to Policy No. FB9901238 is subject to General Condition 12(B)." 38. In the premises, the Cross-Defendant and its privies are estopped from: (a) asserting that General Condition 12(B) of the Policy did not impose a retroactive date exclusion, whereby losses incurred and claims arising from circumstances which occurred before the date of acquisition are excluded from the cover provided under Section IV of the Policy to a Subsidiary acquired after 31 December 1999; (b) denying that General Condition 12(B) has the effect of excluding from the cover- provided under Section IV of the Policy to Subsidiaries acquired after 31 December 1999, losses incurred and claims arising from circumstances which occurred before the date on which they became a Subsidiary; (c) asserting that General Condition 12(B) did not impose a retroactive date exclusion, whereby losses incurred and claims arising from circumstances which occurred before the date of acquisition are excluded from the cover provided under Section IV of the Shortfall Policy to a Subsidiary acquired after 31 December 1999; (d) denying that General Condition 12(B) has the effect of excluding from the cover provided under Section IV of the Shortfall Policy to Subsidiaries acquired after 31 December 1999, losses incurred and claims arising from circumstances which occurred before the date on which they became a Subsidiary; and (e) denying the facts pleaded in paragraphs 14 and 15 of the Cross-Claim. 22(d)(i) at all material times, General Condition 12(B) operated so as to impose a retroactive date exclusion on any cover provided to the First and Second Plaintiffs under Section IV of the Policy and the Shortfall Policy (the retroactive date being the date on which the First and Second Plaintiffs became Subsidiaries of AMP Limited); or 22(d)(ii) in the alternative, by reason of the matters pleaded in paragraphs 30 to 67 below, the Plaintiffs are estopped from denying that General Condition 12(B) operated so as to impose a retroactive date exclusion on any cover provided to the First and Second Plaintiffs under Section IV of the Policy and the Shortfall Policy (the retroactive date being the date on which the First and Second Plaintiffs became Subsidiaries of AMP Limited). 65. In the premises, AMP Limited and its privies are estopped from: (a) asserting that General Condition 12(B) did not impose a retroactive date exclusion on the cover provided to the First and Second Plaintiffs under Section IV of the Policy, whereby claims arising from circumstances which occurred before the date of acquisition are excluded; (b) denying that General Condition 12(B) has the effect of excluding from the cover provided to the First and Second Plaintiffs under Section IV of the Policy claims arising from circumstances which occurred before the date on which the First and Second Plaintiffs became Subsidiaries of AMP Limited; (c) asserting that General Condition 12(B) did not impose a retroactive date exclusion on the cover afforded to the First and Second Plaintiffs under Section IV of the Shortfall Policy, whereby claims arising from circumstances which occurred before the date of acquisition are excluded; and (d) denying that General Condition 12(B) has the effect of excluding from the cover provided to the First and Second Plaintiffs under Section IV of the Shortfall Policy claims arising from circumstances which occurred before the date on which the First and Second Plaintiffs became Subsidiaries of AMP Limited. 67. In the premises, there is a privity of interest between each of the Plaintiffs and AMP Limited in relation to the Policy and the Shortfall Policy and the Plaintiffs are bound by the estoppels pleaded in paragraph 65 above. Relevant terms of the policy 7 The policy was signed on 13 June 2000 by the Lloyds policy signing office. It includes some seven sections, each offering specific insurance cover on individual terms and conditions. Those terms and conditions include special definitions, special exclusions and special conditions applicable to each individual section. The policy also includes a schedule of general application, and general definitions, general exclusions and general conditions. Those general definitions, exclusions and conditions apply to all sections of the policy except to the extent that their operation is expressly excluded. 8 Item 2 of the schedule states the name of the Assured as "AMP Limited". Item 4, "Retroactive Date", states that there is "no retroactive limitation". Item 8 of the schedule sets out the deductibles under the various sections of the policy. In general terms, the deductible is $5 million for each claim (with a maximum amount of $25 million for any 12 month period of the policy), subject to a number of stated different deductibles for various sections and subsections of the policy. 9 Item 15 of the schedule is relevant, but I will return to it after setting out the terms of general condition 12(B). 10 Section I of the policy deals with Blanket Bond insurance. The insuring clause offers indemnity "for such direct financial loss as hereafter stated sustained by the Assured subsequent to the Retroactive Date and discovered by the Assured during the period of the policy". Clause 16 of the special exclusions to section I excludes "loss not discovered during the period of the Policy and any loss sustained prior to the Retroactive Date stated in the Schedule…". 11 Section II deals with electronic and computer crime. Its insuring clause, and a relevant special exclusion (number 15) refer to the "Retroactive Date" in the same way as do the insuring clause and the relevant special exclusion (number 16) for section I. 12 Section III of the policy provides Special Accident insurance. As with sections I and II, the insuring clause restricts the obligation to indemnify to loss (of the relevant kind) "sustained by the Assured subsequent to the Retroactive Date". However, there do not appear to be any special exclusions relevant to section III. 13 Section IV deals with Professional Indemnity. The plaintiffs say that section IV is the section of the policy pursuant to which they are entitled to indemnity. 14 The insuring clause "provides an indemnity to the Assured… in respect of the Assured's legal liability to third parties for any third party claim which meets" a number of specified requirements. It is not necessary to go to those requirements for the purpose of dealing with the 16 questions. 15 Section IV contains a special definition of "Assured": 1 "Assured" shall mean: (a) the Assured as defined in General Definition 2; and (b) the Officers and Employees (as defined in these Special Definitions) of the Assured while acting in such capacity. 16 There is nothing in the insuring clause for section IV that makes reference to a "Retroactive Date". Nor is there any special exclusion that refers to a "Retroactive Date". 17 Section V of the policy deals, in subsection A, with Superannuation Trust Funds Insurance and, in subsection B, with Superannuation Trustees Liability. 18 The insuring clause for section VA refers to "loss or damage sustained or liability incurred as specified in Section I – Blanket Bond or Section II – Computer Crime – of this policy". There is no specific reference in the insuring clause to a "Retroactive date"; but that concept is called up through the cross-references to sections I and II. 19 The insuring clause for Section VB does not include, expressly or by incorporation, any reference to a "Retroactive Date". 20 There is no special condition to either subsection referring to a "Retroactive Date". 21 Special condition (a) notes that for the purposes of section VB only, "General Conditions, 1, 2, 8, 9, 12, 15 and 16 are deemed to be deleted". 22 Each subsection includes a specific definition of "Assured". I do not think that anything of present moment turns on the wording of those definitions. 23 Section VI offers Responsible Entity Insurance. Neither the insuring clause nor any special condition makes reference to a "Retroactive Date". 24 As with section VB, general conditions 1, 2, 3, 8, 9, 12, 15 and 16 "are deemed to be deleted". 25 Further, the general exclusions for which the policy provides "are deemed to be deleted" and a number of special exclusions are substituted. By special exclusions 5 and 10, the underwriters are not to "be liable for Loss arising from any Claim made: 5. Prior Claims and Circumstances In respect of any matter: (a) where notice has been given to Underwriters of any other insurer under a previous insurance policy; or (b) disclosed to Underwriters before the commencement of the Policy Period; or (c) of which the Responsible Entity and/or any Insured Person is aware before the commencement of the Policy Period and which could reasonably have been foreseen by them as being likely to give rise to a claim. This exclusion is independent of and shall not affect the Underwriters other rights regarding misrepresentation and non-disclosure. … 10. which arises out of or in connection with any loss or claim as expressed in the Insuring Clauses of this Section: (a) which has been notified to the Underwriters of any other insurance effected by or on behalf the Responsible Entity; and (b) was known to the Responsible Department prior to the inception of cover under this Section. 26 Special exclusions 5 and 10 are examples of what were frequently referred to, both in the evidence and in submissions, as "Discovery Limitation Clauses" or "DLCs". 27 Section VII of the policy offers Directors and Officers liability insurance (D and O insurance). Perhaps not surprisingly, there is a special definition of the "Assured" who are entitled to the benefit of indemnity under section VII. They are defined by reference to "the Company". By cl 1.2 of that definition, the company in effect is AMP, and the Assured "shall include every Subsidiary Company thereof" subject to cl 1.2.1. So far as it is relevant, cl 1.2.1 provides that: 1.2.1 Where a Subsidiary Company is acquired or created after the commencement of the Policy Period indemnity will be provided to the Assureds and the Subsidiary Company but only in respect of any Wrongful Act committed, attempted, or allegedly committed or attempted subsequent to the date of acquisition or creation unless otherwise agreed in writing by Underwriters. Where the total assets of any Subsidiary Company acquired or created subsequent to the commencement of the Policy Period exceed 20% of the total assets of the company notification shall be provided to underwriters as soon as reasonably practicable. Underwriters shall be entitled to such additional information as they may require in respect of such acquired or created Subsidiary Company and shall have the right to charge a reasonable additional premium. 28 Neither the insuring clause nor any other part of Section VII refers (expressly) to a "Retroactive Date". 29 As I have said, there are a number of general definitions. General definition 2 deals with the concept of the "Assured". So far as is relevant, it reads as follows: 2. "Assured" means: (i) the Assured named and stated in Item 2 of the Schedule of this Policy; and/or (ii) any Subsidiary Company or Companies as at inception of the policy period expressed in the Schedule; and/or any Subsidiary Company or Companies constituted or acquired thereafter: and/or … provided that the inclusion in this insurance of companies acquired by the Assured subsequent to commencement of the Policy Period stated in Item 3 of the Schedule is subject to General Condition 12(B). 30 At the conclusion of the General Definitions, the following appears: WHENEVER ANY OF THE ABOVE TERMS APPEAR IN THIS POLICY, THE WORDS "AS DEFINED" SHALL BE DEEMED TO BE INCORPORATED IN THE TEXT IMMEDIATELY FOLLOWING EACH OF THE SAID TERMS. 31 There is no definition, there or indeed in any of the special definitions, of the phrase "Retroactive Date". 32 The general exclusions include two clauses, numbered 3 and 4, which are examples of Discovery Limitation Clauses: 3. Any loss or third party claim arising out of or in connection with any event specified in Section I or Section II or cause of claim defined in Section IV Insuring Clause III) or Claim as defined in Section V.B: (a) which has been notified to the Insurer on any other policy of insurance effected prior to the inception of this policy; or (b) was known to the Responsible Department prior to the inception hereof. 4. Any claim:- (a) arising out of or in connection with any circumstances or occurrences which have been notified to the insurer on any other policy of insurance effected prior to the attachment date of coverage hereunder; (b) arising out of or in connection with any circumstances or occurrences known to the Assured prior to the attachment date hereof. 33 It was common ground that cl 4 of the general exclusions had not been in any of the prior policies (see at [58] and following below), but that cl 3 had been in each of those policies. 34 Clause 12 of the general conditions deals with two subjects: merger or change in ownership (cl 12(A)), and acquisitions (cl 12(B)). Although cl 12(A) is of limited relevance, it is referred to in cl 12(B) and accordingly I set out the whole of the clause: 12(B) Acquisitions Notwithstanding sub clause (1) of Section A of this General Condition, acquisitions made by the Assured will be automatically covered by this Policy on terms and conditions to be agreed by Underwriters and subject to advice to Underwriters within 60 (sixty) days of acquisition, provided that (a) the employees of any such acquisition do not exceed the number expressed in Item 15(A) of the Schedule, and (b) total assets do not exceed the amount expressed in Item 15(B) of the Schedule, and (c) no loss, of the type covered by this insurance greater than the amount expressed in item 15(C) of the Schedule has been sustained in the last five years by the company acquired. The Retroactive Date in respect of the acquisition to be the date of acquisition or to be agreed by Underwriters. Notwithstanding anything contained herein it is further understood and agreed that there shall be no automatic cover for acquisitions in the USA and/or Canada. 35 From time to time in their submissions, the parties referred to the sentence in which the phrase "[t]he Retroactive Date" appears as "the retroactive date sentence" or "the relevant sentence". I shall adopt those usages in these reasons. 36 I return to item 15 of the schedule. For the purposes of general condition 12(B)(a), item 15 specifies the number of employees as 1800. For the purposes of general condition 12(B)(b) item 15 specifies the total assets as $8 billion. For the purposes of general condition 12(B)(c), Item 15 specifies the maximum amount of loss as $5 million. The proper construction of general condition 12(B) 37 The issue of construction is raised by questions 1, 4 (in part), 6 (in part), 9 (in part), 14 (in part), 16(a), 16(b) and 16(f). Broad outline of the competing positions 38 Mr MA Pembroke of Senior Counsel, who appeared with Mr TM Mehigan of counsel for the plaintiffs and AMP (as cross-defendant) submitted that the reference to "Retroactive Date" in the relevant sentence was intended to provide content to the expression "Retroactive Date" wherever it was used in the policy: specifically, in sections I, II and III. He submitted that neither those words in particular nor the relevant sentence in general operated so as to impose a freestanding retroactive date limitation on the cover available to an after-acquired "Assured" in other circumstances, and specifically for the purposes of section IV. 39 Mr AJ Meagher of Senior Counsel, who appeared with Mr RJH Darke of Senior Counsel and Mr GKJ Rich of counsel for the defendants, submitted that the relevant sentence imposed a restriction on the cover available to after-acquired Assureds. For any section of the policy, Mr Meagher submitted, cover was not available for claims arising out of circumstances that occurred before the date of acquisition unless the underwriters specifically agreed otherwise. 40 I should note that no party submitted that general condition 12(B) was only an agreement to agree. It was common ground that, provided the conditions of general condition 12(B) were met, any subsidiary acquired by AMP during the period of insurance would be automatically covered on the terms of the policy unless and until the parties agreed otherwise. It is unnecessary to consider what might be the case if (for example) the defendants required, and AMP would not agree to, some particular term (as to premium or otherwise) in respect of a particular acquisition. Submissions for the plaintiffs 41 Mr Pembroke submitted that on its proper construction the retroactive date sentence operated, in the case of subsidiaries acquired by AMP after 31 December 1999, to fix the "Retroactive Date" for the purposes of any insuring clause or special exclusion in the policy. He noted that the defendants were not obliged to continue to provide cover on the terms of the policy, but were free to stipulate (as from time to time they did) for particular terms or for a particular premium in respect of any acquired subsidiary. 42 He submitted that the construction for which the plaintiffs contended gave effect to the natural English meaning of the words in question, and was consistent both grammatically in the context of cl 12(B) and, more generally, with the structure of the policy as a whole. In this context, he drew attention to the way in which the policy distinguished between exclusions of and conditions to liability, both particularly (by special exclusions and special conditions for each separate section) and generally (by general exclusions and general conditions). 43 Mr Pembroke drew attention to the fact that wherever the phrase "Retroactive Date" appeared in the policy, the initial letters were capitalised. He submitted that although the phrase was not expressly defined in the policy, it is in effect a defined term because it appears in item 4 of the schedule to the policy. 44 Mr Pembroke stressed that the policy provided unlimited retroactive cover, subject to the DLCs set out in general exclusions 3 and 4. He noted that this feature of the policy had been constant throughout the various prior policies between AMP (or its mutual predecessor the Australian Mutual Provident Society Limited (the Society – in general, I shall use the expression "AMP" to denote whichever entity was the "Assured" at any given time)) and various underwriters in the London market. The first such policy (excluding D and O insurance, which until 1999 was separately effected) was negotiated in 1995, and provided cover for the period 30 September 1995 to 30 September 1998. 45 Thus, Mr Pembroke submitted, the policy provided adequate protection to the defendants whilst at the same time providing unlimited retroactive cover for businesses acquired by AMP during the period of insurance. The protection for the defendants was achieved because: (1) they had the benefit of the DLCs in general exclusions 3 and 4; and (2) they had the right to stipulate for specific terms, or an additional premium, in respect of any particular acquisition. 46 Mr Pembroke submitted that there was nothing commercially absurd in giving to general condition 12(B) the construction for which the plaintiffs contended. On the contrary, he submitted, the construction for which the defendants contended did have commercially absurd and illogical outcomes. Further, Mr Pembroke submitted, the construction for which the defendants contended was inconsistent with the natural meaning of the words in question, and with the structure of the policy overall. Submissions for the defendants 47 Mr Meagher pointed to the definition of "Assured" in general definition 2 (see at [29] above. He noted that the words "this insurance" referred to the cover given by sections I to IV. That was so, he said, because there were special definitions of "Assured" for sections VA and VB and VII; and section VI referred not to "Assureds" but to a "Responsible Entity" or an "Insured Person". Thus, Mr Meagher submitted, an entity acquired after the commencement of the policy period could only become an "Assured" for the purpose of any of sections I to IV if it met the requirements of general condition 12(B). In this way, Mr Meagher submitted, the policy singled out entities acquired after the commencement of the period of insurance. Their inclusion among the class of "Assured" was expressly made "subject to General Condition 12(B)"; in no other case was this done. 48 It follows from this, Mr Meagher submitted, that an acquired entity's inclusion in the class of "Assured", and therefore in the class of those entitled to the benefit of (among others) section IV, was expressly made "subject to" the retroactive date sentence, unless the defendants agreed otherwise. In other words, as I understood the submission, the retroactive date sentence should not be read as an exclusion, appearing perhaps somewhat anomalously (given the structure of the policy) in a general condition, but as a condition of entitlement to cover. 49 Mr Meagher submitted that the expression "retroactive date" was one commonly employed in insurance, and that it had a well understood meaning. Its meaning, he submitted, was that losses sustained prior to a specified retroactive date (with or without initial capital letters), and claims arising out of events prior to that date, were not covered. 50 Mr Meagher did not put that the market understanding of the phrase "retroactive date" (with or without initial capital letters) governed the meaning to be given to the retroactive date sentence. He did however submit that it was a matter of shared background knowledge, or context, that should be taken into account in seeking to ascertain what, objectively, the parties meant by the retroactive date sentence. 51 As to the use of initial capital letters, Mr Meagher relied on the observations of Lord Mustill in Touche Ross and Co v Baker [1992] 2 Lloyds Rep 207 at 213. His Lordship there observed "that insurance documents in the London market are rarely drawn with the precision of language needed for grammatical contrasts to be a reliable guide to intention". In this context, Mr Meagher pointed to a number of what he said were inconsistent usages within the policy of initial capital letters: in some cases they denoted defined terms and, in other cases they did not. He did not, however, suggest that this applied to the use of the words "Retroactive Date" (see Mr Pembroke's submission recorded at [43] above). 52 Mr Meagher noted that it was a consequence of the approach for which the plaintiffs contended that the "automatic" cover afforded to after-acquired subsidiaries under sections I to III of the policy would be subject to a retroactive date exclusion unless the defendants agreed to waive it, whereas cover under section IV would not. He submitted that there was no sensible reason why such a distinction would be drawn. On the contrary, he submitted, there was no sensible reason why a reasonable underwriter would extend automatic retrospective coverage for professional indemnity insurance (being an area in which claims were notoriously slow to develop) but impose it for crime insurance (being an area where claims were generally discovered, and notified, promptly). Principles relevant to the question of construction 53 The parties were agreed as to the relevant principles, and thus it is not necessary to deal with them in detail. The court is concerned to ascertain the "objective intention" of the parties, insofar as that intention appears from the terms in which the parties expressed their contract and other matters to which the court may have regard. Those matters include the purpose and object of the transaction – what, in a commercial sense, the parties were seeking to achieve by it. However, in looking at the purpose or object of the transaction, the court seeks to ascertain them objectively. It does not ascertain them by reference to the subjective intentions, or expectations, of the parties. See, generally, Campbell JA in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 655 – 666 [262] – [265]. 54 The term in question is to be given that meaning which a reasonable person, having the background knowledge of the parties at the time of the agreement was made, would understand it to have from the language used by the parties. See Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 461 – 462 [22]. In undertaking the construction of the term, the court should take into account the purpose that reasonable persons in the positions of the parties would have. To do this, the court should have regard to the genesis of the transaction, the background to it, its context, and the market in which it was made. See Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 at 559 [82]. 55 Further, in construing a contract, the court should have regard to all of its terms, and should seek to construe them consistently and, so far as possible, harmoniously (to paraphrase the observations of Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109. Background to the issue of the policy 56 The plaintiffs laid stress on what they said was the course of negotiations for the policy and for prior policies. 57 It seems that the Society first turned its attention to taking out composite cover in about 1991. It instructed a broker then known as Nicholson Chamberlain Colls Australia Limited to obtain quotations. That broker, which subsequently changed its names to Nicholson Leslie Australia Limited, was a member of the Nicholson Leslie Group. That group included a London broker known as Nicholson Leslie Financial Institutions Limited. The Nicholson Leslie Group was subsequently taken over by AON Group Limited. It is convenient, having acknowledged these changes, to refer to the Australian broker as "AON Australia" and to the London broker as "AON UK", for the whole of the period with which these reasons are concerned. 58 In January 1994, AON Australia provided quotations for composite cover to the Society. In April 1994, the Society instructed AON Australia to proceed with obtaining composite cover on the London market. 59 AON Australia discussed the terms of the cover with AON UK. The Professional Indemnity section of the draft policy (then section III) referred to "the Retroactive Date" in both the insuring clause and a special exclusion. However, since the proposal was based on unlimited retroactive cover for the Society and its subsidiaries at the time of negotiation, AON Australia suggested to AON UK that these references to the Retroactive Date be deleted. After some exchange of faxes between them, this was done. 60 The changes that were negotiated between AON Australia and AON UK did not relate, in any relevant way, to general condition 12(B). The only change to that clause discussed between them related to the time for notification of acquisitions. This was extended from 30 days in the original draft to 60 days. I note that, both in the draft and in the policy that was issued for the period 22 April 1994 to 30 September 1995 (the 1994/1995 policy) clause 12(B) referred to acquisitions being "held covered" rather than "automatically covered". The phrase "automatically covered" was first used in the 1996/1999 policy (see at [62] below). 61 At this stage, I should note that it was common ground that both AON Australia and AON UK were to be regarded as agents of the Society (and, in due course, of AMP). Thus, Mr Meagher submitted, the negotiations between them could not be described in any meaningful way as the negotiation of the terms of the 1994/1995 policy between the Society and the underwriters. The plaintiffs relied on what they said was evidence that one of the lead underwriters for the 1994/1995 policy, known as Syndicate 1007, had approved the wording of the draft policy. This was said to have occurred after the changes to which I have just referred were made. Although the individual concerned, Mr Jonathan Butcher, had no recollection of reading and approving the wording, he accepted that he would have done so before committing Syndicate 1007, and a number of other syndicates whom he was authorised to bind, to the terms of the 1994/1995 policy. It does not follow from this that Mr Butcher (or anyone else on behalf of the underwriters) was involved in the negotiation of the wording, or that the underwriters in question were aware of the debate between AON Australia and AON UK. 62 The 1994/1995 policy was in substance renewed (of course, with changes in the premium negotiated, and I think as well with some changes in the underwriters who subscribed it) for the period 30 September 1995 to 30 September 1998 (the 1995/1998 policy). That policy was replaced, during its term, by a policy covering the period 31 December 1996 to 31 December 1999 (the 1996/1999 policy). Both those policies utilised substantially (if not exactly) the wording of the 1994/1995 policy. 63 In late 1998 or early 1999, a number of underwriters scratched a "Comprehensive Crime Line Slip Facility Number 82F/FB900295". That document was commonly referred to as the "Jumbo Line Slip" and I shall adopt that usage in these reasons. 64 The jumbo line slip was given in favour of AON UK. In substance, I think, its purpose was to make it easier for AON UK to place cover falling within the terms of the jumbo line slip. 65 The underwriters who had scratched the jumbo line slip fell into a number of different categories. One category was the "leading underwriters". Another category was the "follow market". In essence, if at least two of the leading underwriters made a "declaration" whereby they agreed to accept a policy falling within the terms of the jumbo line slip, the follow market was bound automatically. However, if the policy fell outside the terms of the line slip, the leading underwriters could not bind the follow market to it. There were also "bind own line" and "enhanced line" underwriters. They were not bound by any declaration made by the leading underwriters, but could accept or reject it as they pleased. 66 To jump ahead somewhat: the jumbo line slip is relevant for a number of reasons. In particular, it was common ground between the parties that, insofar as questions of subjective intention or understanding of the underwriters were relevant, the intention or understanding of the follow market – those automatically bound to a policy by a declaration made pursuant to the jumbo line slip – is to be ascertained by reference to the intention or understanding of the leading underwriters who made the declaration. 67 The 1996/1999 policy was in substance renewed for the period covered by the policy – 31 December 1999 to 31 December 2002. As before, although no doubt there were changes in the premium structure, and I think there were again changes in the composition of the underwriters, the policy wording did not change in any substantial way. One change that was made was to general condition 12(B). The words "held covered" became "automatically covered". 68 As I have said, the period of insurance under the policy was extended for one year by endorsement 8, and the shortfall policy was issued at about the same time. Nothing relevant to the question of construction depends on these events. Evidence of market understanding 69 The defendants relied on what they said was an understanding, in the London insurance market, of the phrase "retroactive date" when used in a policy of insurance. In substance, they submitted, that phrase was understood to indicate that cover provided subject to a "retroactive date" limitation did not extend to claims arising out of circumstances that occurred before the specified retroactive date. 70 A number of the underwriters called by the defendants did indeed give evidence to that effect. I accept that evidence. I should say that in my view, each of the witnesses called by the defendants sought to give truthful evidence. No attack was made on the credibility of any of the defendants' witnesses, and in general I accept them, subject to the obvious limitations of memory which in most cases they acknowledged, as witnesses upon whose evidence the Court could rely. 71 It is I think self-evident that at least AON UK was a participant in the London insurance market. No evidence was called from any representative of AON UK – specifically, those within AON UK who had responsibility for placing all of the policies in question – to controvert the evidence of market understanding given by the defendants' witnesses. Nor could any such evidence have been given. It is clear from various documents (including emails) emanating from AON UK that relevant personnel within that organisation had the same general understanding of a "retroactive date" limitation as did the defendants' witnesses. The same may be said in general (but see at [155] to [160] below) for AON Australia and its relevant personnel. 72 Thus, to the extent that it may be relevant in informing the construction of the policy, and in particular the relevant sentence, I accept that at all material times a "retroactive date" limitation on cover in a policy underwritten in the London insurance market was understood to have the effect for which the defendants contended. 73 Nonetheless, it is necessary to bear in mind that the defendants' witnesses conceded that they understood at all relevant times that the proper construction of the policy, in the event of a dispute, was ultimately a matter for the courts; and that their understanding of the policy in general, or of the relevant sentence in particular, might not be accepted by a court undertaking the task of construction. Decision 74 The starting point of the analysis must be the language employed by the parties to record their agreement. That requires careful attention to the relevant terms of the policy. Those terms include at least the following: (1) the insuring clause for section IV; (2) the definition of "Assured" in general definition 2; and (3) general condition 12(B), dealing with acquisitions. 75 Having identified those terms of the policy, it is necessary to bear in mind that they cannot be considered in isolation, either from each other or from the terms of the policy as a whole. It is correct to say – particularly from the plaintiffs' perspective – that the references to "Retroactive Date" in item 4 of the schedule and elsewhere in the policy, and the DLCs in general exclusions 3 and 4, must be taken into account in any analysis of the relevant sentence. So, too, that analysis must take into account the provisions of the policy in which no reference is made to any "retroactive date" (with or without initial capital letters). 76 The insuring clause for section IV gives "the Assured" indemnity, subject to the terms and conditions of the section, in respect of "the Assured's" liability to third parties meeting the requirements set out in subclause (III) of the insuring clause. 77 To understand who is entitled to the benefit of that indemnity, it is necessary to go to the definition of "Assured". Relevantly for the purposes of this analysis, the "Assured" includes: (i) AMP; (ii) any subsidiaries of AMP at the inception of the policy; and (iii) any subsidiaries of AMP constituted or acquired after inception of the policy and during the policy period. 78 The definition of "Assured" includes not only AMP and its subsidiaries as I have described them, but also three other categories of entities and persons. Those other categories are not directly relevant. 79 The definition of "Assured", having listed the various categories of entities and persons that fall within the definition, makes specific provisions for subsidiaries acquired after inception of the policy and during the policy period. I will refer to those as "after – acquired subsidiaries". As to those after-acquired subsidiaries, but not as to any other entity or person falling within the definition of "Assured", the definition stipulates that their inclusion "in this insurance" – i.e., within the class of entities or persons entitled to the benefit of indemnity under any section of the policy that extends indemnity to the "Assured" – "is subject to general condition 12(B)". 80 By that means, attention is directed to the third of the provisions of principal relevance to which I have referred: general condition 12(B). The effect of the proviso to the definition of the "Assured" in general definition 2 is that an after – acquired subsidiary must meet the conditions spelled out in general condition 12(B) before it falls within the class of "Assured" so as to become entitled to the benefit of indemnity under the relevant insuring clauses. 81 General condition 12(B) is expressed to operate by way of exception to general condition 12(A)(i). Presumably, it was thought that the acquisition of a subsidiary during the period of insurance could be seen as a "purchase" falling within that subclause; or perhaps the introductory words of general condition 12(B) were inserted, in the time hallowed phrase, "for the avoidance of doubt". Be that as it may, cl 12(B) extends to after - acquired subsidiaries meeting the criteria expressed in the clause (which I will call "relevant acquisitions") the benefit of automatic coverage as an "Assured". 82 As a general rule, where a particular expression is used repeatedly throughout a written contract, one should seek to give it the same meaning wherever it appears. In this case, the plaintiffs' submissions achieve that; it is, perhaps, doubtful whether the same can be said for the defendants' submissions. However, the application of that general principle must give way, in a particular case, to a clear (objective) indication of contrary intention. 83 In this case, the expression "Retroactive Date" is not used consistently throughout the policy. There is an obvious distinction between the way the words "Retroactive Date" are used in general condition 12(B), and the way that they are used elsewhere in the policy. In general condition 12(B), the words are not said to have some (or any) stated effect, nor is their significance explained. The relevant sentence simply says what the "Retroactive Date" is in respect of any relevant acquisition. However, where the words in question appear elsewhere, either in an insuring clause or in a special exclusion, their significance is made clear. For example, the insuring clause for section I states explicitly that the indemnity given by that section applies only for losses "sustained subsequent to the Retroactive Date". Special exclusion 16 to that section affirms that the indemnity offered by section I does not extend to "any loss sustained prior to the Retroactive Date". 84 This analysis lends some support to Mr Pembroke's submission that the relevant sentence was intended only to define, in the case of relevant acquisitions, the "Retroactive Date" to the extent that this concept might be relevant. On this analysis, one would not readily attribute, to those words in the relevant sentence, any independent exclusionary effect. That is because, on this analysis, the exclusionary effect is supplied expressly by other provisions of the policy called up by those words, or in which those words are used. 85 Another, although related, distinction may be seen between the use of the words "Retroactive Date" in general condition 12(B) and their use elsewhere in the policy. Where those words are used in an insuring clause, they are used to qualify the loss for which indemnity is to be provided. Thus, indemnity is "for" (see the insuring clause for sections I and II) or "restricted to" (see the insuring clause for sections III) loss "sustained by the Assured subsequent to the Retroactive Date". 86 Again, in the special exclusions to each of sections I and II, the exclusion is, relevantly, of "loss sustained prior to the Retroactive Date stated in the Schedule". 87 By contrast, in general condition 12(B), the words "Retroactive Date" are related not to loss but to "the acquisition". In this context, the phrase "the acquisition" refers back to the introductory words of the clause: "… acquisitions made by the Assured". This usage may suggest that the automatic cover provided to such acquisitions is qualified by a retroactive date for each acquisition: the date of acquisition unless otherwise agreed. On this analysis, what would be called up is not the reference to "Retroactive Date" in the schedule to the policy and elsewhere but the general market understanding of the phrase "Retroactive Date" to which I have referred to at [69] to [72] above. 88 However, the problem is not one to be resolved merely by the application of detailed linguistic and semantic analysis. The words in question are words used in a commercial contract. They are not the words of a statute. Ultimately, resolution of the question requires the identification of the (objective) common intention of the parties, so far as this can be gleaned from their dealings and the language employed in their contract. 89 The underwriters from time to time were prepared to offer insurance to AMP without any retroactive date limitation. They were prepared to do this because, presumably, they were satisfied that AMP's systems of management and internal control were sufficiently robust to ensure that wrongdoing would be detected and reported, and thus to call into play, for the protection of the underwriters, the DLCs. To put it another way the underwriters were presumably content, on the strength of the DLCs, to offer indemnity without any retroactive date limitation. 90 The information provided to the underwriters in respect of AMP, and the underwriters' ability to request more information, and to analyse the information given, underpinned the underwriting decision to accept the risk (of offering retroactive cover) subject only to the protection offered by DLCs. But the underwriters would not be given equivalent (or any) information in respect of subsidiaries acquired by AMP during the period of insurance. Thus, at the moment when cover attaches to a relevant acquisition, one would not expect the underwriters to be in possession of any information, let alone information sufficient to enable them to assess the risk of offering cover on a retroactive basis, for that subsidiary. 91 At the same time, cover offered for relevant acquisitions is "automatic". The attachment of cover, on the terms of general condition 12(B), does not involve any underwriting decision in respect of the extension of cover to the subsidiary. To the extent that there was any underwriting decision involved, that was a decision made for the purpose of subscribing to the relevant policy, including as it did a provision for automatic cover in respect of relevant acquisitions. 92 It is of course correct to say that, after an acquisition is made, the underwriters would have the opportunity to obtain and analyse information in respect of it. They would have the opportunity, and ability, to satisfy themselves as to the risk involved in offering retroactive cover to such an acquisition. But that is something that happens after the automatic attachment of cover, and in the course of deciding what (if any) "terms and conditions" are "to be agreed" in respect of it. 93 One can understand why the underwriters were prepared to offer automatic cover (subject to DLCs) in respect of acquisitions from the date of acquisition. From that date, the acquisition would become subject to the management systems and internal controls of AMP: systems and controls thought to be sufficient strong to justify offering retroactive cover to AMP subject only to the protection afforded by DLCs. But it does not follow that the underwriters would have been prepared to take on, as well, the risk that such "due diligence" investigation (if any) as AMP had conducted was sufficient to indicate an acceptably low likelihood of claims emerging from pre-acquisition activities. 94 These considerations suggest that the intention of the parties, objectively ascertained, was to ensure that the automatic coverage extended to acquisitions by general condition 12(B) did not of itself oblige underwriters to accept an obligation to indemnify the acquisition for claims arising from matters that occurred before the date of acquisition. They might explain also why, in general condition 12B, the concept of "Retroactive Date" is linked to "the acquisition" rather than (as elsewhere in the policy) to "loss". 95 The phrase "automatically covered" was first used in the 1996/1999 policy. In the prior policies (the 1994/1995 and 1995/1998 policies), and in the draft policy wording that was created during the course of negotiations for the 1994/1995 policy, the relevant phrase was "held covered". Whatever difference there may be between "held covered" and "automatically covered", they share a theme: that the cover which they grant is extended by operation of the contract of insurance in place, not pursuant to an independent underwriting submission, analysis and decision. Thus, I do not think that the change in this aspect of the wording of general condition 12(B) has any bearing on the analysis that I have just set out. To put it another way, that analysis is as much applicable to a condition that "holds covered" an acquisition as it is to one that offers "automatic cover" to an acquisition. 96 As I have noted, Mr Pembroke submitted for the plaintiffs that the construction for which the plaintiffs contended gave effect to the natural English meaning of the relevant sentence in context. I am not sure that this submission assists the plaintiffs. The ordinary English meaning of "retroactive" is "having retrospective effect" – i.e., affecting things that occurred in the past; and the ordinary (relevant) English meaning of "date" is "a particular day or year". See, in each case, the Australian Oxford Dictionary (second edition, 2004). 97 Applying those ordinary English meanings might suggest that, "in respect of the acquisition", the particular day to which automatic coverage under the policy has retrospective effect is the date of acquisition. This construction: (1) gives effect to the ordinary English meaning of the words; (2) recognises that, in the context of general condition 12(B), the phrase "Retroactive Date" is used in respect of acquisitions; and (3) gives effect to the market understanding to which I have referred. 98 There is considerable force in Mr Meagher's submission that it would have been commercially absurd for the underwriter to stipulate for a retroactive date limitation in respect of cover under sections I to III but not for cover under section IV. The underwriters' evidence to that effect was substantially unchallenged (and, to the extent that it was challenged, unshaken). I accept it. I am comforted in accepting it by two considerations. The first is that the rationale offered – the distinction between the long-tail nature of cover under section IV, as opposed to cover under sections I to III – provides a sound commercial justification. The second is that the underwriters' evidence on this point was confirmed by the evidence of Mr Paul (Gary) Traill. Mr Traill was, at the relevant time, AMP's General Counsel. He said that he had ultimate responsibility (subject to the decision of the Board Compliance Committee and the Board) for AMP's Specialised Insurance Program (or "SIP") of which program the policy and its predecessors formed part. Mr Traill accepted that it would be unreasonable to impose on underwriters an obligation to accept "blind" a liability for "outstanding hidden claims". This was something that he would expect "wouldn't be covered" (T246-247). 99 Again, Mr Martin Wright (who was at all relevant times the managing director of Towry Law Insurance Brokers Limited and a director of the first plaintiff Towry Law plc), and who had substantial experience in insurance matters in general and the London market in particular, said that he would not generally expect underwriters to commit themselves to an acquisition "blind", when they knew nothing about it (T324, 327), and that underwriters would have been less likely to grant professional indemnity cover blind than to grant crime cover blind (T327-328). 100 Thus, on the totality of the evidence (including the plaintiffs'), I conclude that the construction of general condition 12(B) for which the plaintiffs contend does involve absurd or illogical commercial consequences. The construction for which the defendants contend does not. 101 I accept that the construction for which the defendants contend may appear to be inconsistent with the structure of the policy as a whole: involving, as Mr Pembroke submitted, an otherwise systematic distinction between exclusions of and conditions to liability (both particular and general), and a structural separation of those concepts. However, reliance on matters of formal structure can only go so far. Where there are other obvious indicia for the construction supported by those formal structural considerations, it is legitimate to take them into account. But where there are significant difficulties caused by that construction (as in my view is the case here), and where the structural considerations do nothing to dispel or alleviate those difficulties, considerations of structure cannot be dispositive. In any event, if it is correct to regard the relevant sentence as a condition of the automatic cover offered to relevant acquisitions, the significance of this point diminishes. 102 There are two other matters that support the construction for which the defendants contend. The first is a restatement of what I have said already: that it recognises, and gives effect to, what was at all relevant times the market understanding of a "retroactive date limitation" (see at [69] to [72] above). (Lest it be thought that, by referring not just to the actual words used in general condition 12(B) – "Retroactive Date – but to a "retroactive date limitation", I am begging the question, I point out that it was common ground that the words did import a limitation on claims for which indemnity would be offered. The issue was as to the nature of the limitation.) 103 The second matter is that it is sensible to talk of a retroactive date limitation in the context of automatic cover. Automatic cover is provided to acquisitions (and, under earlier policies, they were held covered) from the date of acquisition. That extension of cover was subject to a number of things, including that notice of the acquisition be given to underwriters within 60 days of acquisition. In a practical sense, the extension of cover to acquisitions was retroactive, because in the usual case it would have attached before the underwriters became aware that they were on risk in respect of the acquisition. Thus, the relevant sentence could be seen as reinforcing the proposition that it was the fact of acquisition (subject to subsequent notification and other matters), rather than the fact of notification, that operated to extend cover. 104 For those reasons, I conclude that general condition 12(B), and in particular the relevant sentence, is to be construed as the defendants submit. 105 It follows that the answer to question 1 is "yes"; and that answer flows through (to the extent necessary) to the other questions identified at [37] above. 106 However, for reasons to which I now turn, that answer does not deal in full with question 6. Question 6 107 Question 6 involves two issues. The first is the construction of general condition 12(B). The second issue is the application of general condition 12(B), properly construed, to the factual circumstances relating to the acquisition of Towry Law. The first of those issues is answered by what I have said. The second is not. 108 It is common ground that, for the purposes of general condition 12(B), the date of acquisition of Towry Law was 3 August 2001. The shortfall policy commenced on 31 December 2002. In other words, by the time the short - fall policy incepted, the Towry Law companies were existing subsidiaries of AMP; they were not "acquired" during the term of the shortfall policy. 109 In those circumstances, the plaintiffs contend that even if general condition 12(B) were to be construed as I have said it should be construed, the cover afforded to the Towry Law companies under the shortfall policy is not subject to any retroactive date limitation. The evidence 110 Mr Forbes Geekie, the underwriter who scratched the shortfall policy on behalf of the fourth defendant (Zurich), gave evidence on which the plaintiffs relied in connection with this issue. 111 It was suggested to Mr Geekie that, at the time he scratched the shortfall policy on behalf of Zurich, he knew that Towry Law was, and since September 2001 had been, a subsidiary of AMP. He said that he could not specifically recall knowing that, but agreed that he would have reviewed the information submitted in connection with the proposal for the shortfall policy. That information was said to include the details of all subsidiary companies for which coverage was required, including Towry Law. Mr Geekie did not recall "specifically" becoming aware that Towry Law was an existing subsidiary of AMP at the time the shortfall policy was scratched (T166) but agreed that it was "a fair assumption that he would have reviewed the proposal with care, paid attention to the identification of the subsidiaries that were identified in it and of the claims information relating to them (T166-167). Thus, Mr Geekie agreed, "it appears that Towry Law was within the AMP group at" the time when he scratched the slip for the shortfall policy (T167). 112 A little later, Mr Geekie was asked whether he intended, at the time of entry into the shortfall policy, "that Towry Law should be treated as an existing subsidiary for the purposes of the operation of the shortfall policy?". He agreed that "it's a fair assumption that if Towry Law was a subsidiary of AMP, [his] view was that they were covered under the policy terms and conditions (T172-173). 113 Ms Pheroza Edibam also gave evidence on this topic. She was the underwriter who scratched the slip for the shortfall policy on behalf of the fifth defendant (Great Lakes). She did so on 31 January 2003. 114 Ms Edibam agreed that she read the proposal for the shortfall policy before she scratched the slip. She said that she "would have read" whatever "is in the proposal form". 115 It is clear that the proposal for the shortfall policy described the Towry Law companies as subsidiaries of AMP. 116 The slip for the shortfall policy said that its form was: J (A) plus follow form policy following Policy No. FB9901238. NMA Lines Clause (542 NCC 00238) 117 The "conditions" stated in the slip included a condition: (1) as per Policy No. FB9901238 as far as applicable 118 The conditions also included a "Prior Acts Exclusion". That exclusion read as follows: PRIOR ACTS EXCLUSION Any claim or loss based upon, arising out of, directly or indirectly resulting from or in consequence of or in anyway involving any actual or alleged acts, omissions, transactions, circumstances or events (hereinafter referred to as "Acts") which occurred or commenced (or are alleged to have occurred or commenced) prior to 31st December 2002 or any Acts being part of an interrelated series of such Acts where any one or more Acts in that series occurred or commenced (or are alleged to have occurred or commenced) prior to the above date in relation to all activities of the Pearl Group Limited, and/or London Life Holdings Limited and / or all subsidiary and all associated companies. The parties' submissions 119 Mr Pembroke submitted that even if general condition 12(B) were to be given the construction for which the defendants contended, nonetheless, on that construction, the Towry Law companies were subsidiaries of AMP as at the date of inception of the shortfall policy, not subsidiaries acquired during its term. Thus, he submitted, whatever retroactive date limitation might be imposed by the terms of general condition 12(B) did not apply. 120 Mr Pembroke relied on the evidence of Mr Geekie on this point. I do not think that evidence of subjective understanding or intention is relevant to the question of construction. 121 Mr Pembroke laid stress on the "Prior Acts Exclusion" relating to Pearl Group and London Life. He submitted that this showed that the objective intention of the parties was that subsidiaries at the date of inception of the shortfall policy were to have unlimited retroactive coverage unless specifically agreed otherwise (as had happened with Pearl Group and London Life). 122 Mr Meagher noted that the Assured in the slip were described as "AMP Limited and as more fully described and agreed on Policy No. FB9901238". This showed, he submitted, that "there was to be no difference, as between the Shortfall Policy and the Policy, in relation to the entities which qualified as assureds under the various sections of those policies" (written outline of opening submissions, para 145.3). 123 Further, Mr Meagher noted that the sum insured under the shortfall policy was described as "part of" the limits of indemnity stipulated in the policy. This showed, he submitted, "that the Shortfall Policy was only intended to respond to claims that were also covered by the Policy, and was not intended to indemnify the "Assured" in respect of claims to which the Policy did not respond" (para 145.5). The risk was not for a portion of the sum of $41,656,000.00 limit under the shortfall policy. The risk was as to the limits of indemnity specified in the policy; an assured making a claim under the policy, to which claim both the policy and the shortfall policy responded, would be entitled to receive proportionate contributions from the underwriters on risk under the policy and the underwriters on risk under the shortfall policy. 124 Mr Meagher relied on condition 3 of the slip for the shortfall policy, which provided that amendments of any kind would follow amendments to the underlying policy, as agreed by syndicate SJB 1212. This showed, Mr Meagher submitted, "that the parties intended that the two policies operate in the same way and respond to the same claims and losses, subject only to the express exclusions and differences" between them (para 145.7). Decision 125 The shortfall policy came into existence as a result of the extension to the policy effected by endorsement 8. A number of underwriters did not agree to the extension of the policy. As a result, there was a shortfall for the fourth year of cover (i.e., the extension provided by endorsement 8). Three underwriters came on risk via endorsement 8, and took up part of that shortfall. AON sent a draft slip around the market. After considerable negotiation, agreement was reached. Mr Geekie on behalf of Zurich and Ms Edibam on behalf of Great Lakes scratched the slip. Even so, the slip remained undersubscribed: Zurich and Great Lakes between them took only 38.5% of the $41,656,000.00 shortfall. 126 Although the shortfall policy was intended to form a portion of the overall cover afforded to AMP by the policy (as extended by endorsement 8) it remains the case that the shortfall policy comprises two separate contracts of insurance: one between Zurich and AMP, and the other between Great Lakes and AMP. The shortfall policy was made on the basis of a separate proposal, and that proposal disclosed (one assumes) all relevant information. The information disclosed included the identity of subsidiaries of AMP at the date of the proposal, including Towry Law. 127 If the shortfall policy operates as Mr Pembroke submits it does, then there may be (and in this case there would be) disconformity between the cover provided under the shortfall policy and the cover provided under the policy. On the other hand, if the shortfall policy operates as Mr Meagher submits it does, this consequence does not arise. 128 The description of the "Assured" in the shortfall policy refers back to those who are the "Assured" under the policy: AMP, its subsidiaries at the date of inception of that policy and subsidiaries acquired thereafter. Although the shortfall policy thus incorporates the Towry Law companies as falling within the description of the "Assured" it does so not because they were named as subsidiaries in the proposal but because, having been acquired during the term of the policy, they fall within that policy's definition of "Assured" by operation of general condition 12(B). It follows that, for the purposes of the shortfall policy, the Towry Law companies fall within the description of "Assured" because of general condition 12(B) – although as that condition applied to the policy, not to the shortfall policy. It follows in turn that their status as "Assured" is subject to the limitation imposed by general condition 12(B). 129 Put shortly, the Towry Law companies are among the "Assured" under the shortfall policy because they are among the "Assured" under the policy. They are among the "Assured" under the policy because of general condition 12(B), and thus subject to the limitations imposed by that condition. They are not among the "Assured" under the shortfall policy either because their existence as subsidiaries was disclosed by the proposal, or because of the operation of general condition 12(B) as it forms part of the shortfall policy. Conclusion on question 6 130 Question 6 should be answered "yes". Rectification 131 My conclusions on the questions of construction mean that rectification is not required. However, against the possibility that my conclusions on the questions of construction may be wrong, I shall deal with the question of rectification. 132 The issue of rectification is raised by questions 2, 4 (in part), 7, 9 (in part), 14 (in part), 16(c) and 16(d). The relevant principles 133 There was no dispute as to the relevant principles. Where parties reach an agreement, and seek to express their agreement in a document, rectification of the document may be granted where the document, on its proper construction, does not give effect to the parties' agreement: Commissioner of Stamp Duties NSW v Carlenka Pty Ltd (1995) 41 NSWLR 329; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603. To obtain rectification, it is necessary to show that the parties had a common contractual intention up until the time they executed the document; it is not necessary to show an antecedent concluded contract. See Campbell JA (with whom, on this issue, Mason P and Tobias JA agreed) in Ryledar at 655 [259]. 134 When the Court is dealing with the question of rectification, the search for intention focuses not (as does the process of construction) on the objective intention to be attributed to the parties to the contract, but on their actual, or subjective, intentions. See Campbell JA in Ryledar at 657 [267]. The intention is also a "common intention", which requires that there be some outward manifestation, or disclosure of it. See Campbell JA in Ryledar at 667 [316], where his Honour summarised his reasoning from 658 [273] on. Whose intention is relevant? 135 The plaintiffs submitted that the intention of AMP, as the named party to the policy, was to be ascertained by reference to the intention of Mr Traill. As I have said, Mr Traill was the general counsel of AMP at the relevant time, and the person said to have ultimate managerial responsibility for the Specialised Insurance Program. However, the decision to commit to the policy was made not by Mr Traill but by the Board of AMP, on a recommendation from the Board Compliance Committee or Board Audit Compliance Committee (BACC – usually referred to as "BCC"). In turn, the BCC received a detailed report from AMP's management. 136 The defendants submitted that the relevant intention was that of AMP's brokers – in general, AON and specifically, AON UK. It was the brokers, the defendants submitted, who had responsibility for negotiating the terms of the policy with the underwriters. 137 On the view to which I have come, it is not necessary to resolve this dispute. 138 As to the underwriters: it was common ground that the intention of those of the underwriters who subscribed the policy was to be ascertained by reference to the intention of the lead underwriter: Syndicate SJB 1212. Further, as to endorsement 8 (by which the period of insurance was extended by a year, to 31 December 2008) it was common ground that the intention of those of the underwriters who were bound by that endorsement, apart from Zurich, was to be ascertained by reference to the intention of Syndicate SJB 1212. AMP's intention 139 The defendants relied on what they said was an admission made by Ms Berdette Zolezzi in an email of 30 March 2004 to Mr Stephen Bloor of the Towry Law Group. Mr Bloor had "been asked to prepare urgently for our external auditors a summary of the PI coverage that Towry Law had pre and post acquisition and de-merger". (See his email of 26 March 2004 to Ms Zolezzi.) It was common ground that the date of acquisition was 3 August 2001: during the currency of the policy, but after endorsement 8 was made (that endorsement was scratched by the leading underwriter on 15 December 2000). 140 Ms Zolezzi replied to Mr Bloor's request by her email of 30 March 2004. She attached an "assessment of PI coverage for Towry Law". That assessment stated, in relation to the policy (which by then was in run-off) that the "Basis of Coverage" was: Claims made in the policy period. Claims relating to pre-demerger events only. Retro Active [sic] date is date of TL [Towry Law] acquisition by AMP. The question of the applicability of the retroactive date is under consideration, as you are aware. However, it has always been our understanding (and that of our brokers) that the intention of the policy was that the retroactive date would apply to acquisitions. 141 The defendants submitted that this amounted to an admission by Ms Zolezzi by which AMP was bound: Evidence Act 1995, s 87. Section 87 deals with the question of when a previous representation made by a person is to be taken as an admission by a party. (AMP was a party, as cross-defendant, to these proceedings.) Such a representation may be admitted, among other circumstances, "if it is reasonably open to find that… when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority" (see s 87(1)(b)). 142 In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No.4) [2006] NSWSC 90, I said, concerning s 87: (1) the purpose of the section is that set out in the introductory words of subs (1): to enable the court to determine whether a previous representation made by someone is taken to be an admission by a party (at [11]); and (2) the authority to be considered is not in the authority to make the particular representation but the general authority of the person to make statements of the kind exemplified by the particular representation (at [19], [20]). 143 The defendants relied on that analysis. The plaintiffs did not submit that it was incorrect. I propose to approach the question of authority, and therefore the question, of whether Ms Zolezzi's representation binds AMP as an admission, in accordance with that analysis. 144 A "confidential resume" prepared for Ms Zolezzi, undated but bearing a footer "resume 2005.doc", shows the following: (1) she was AMP's Manager, Specialised Insurance from December 1999 to September 2004. Her duties in that role included: (1) maintenance of communication and relationship with brokers (including AON); (2) management and notification of claims; (3) renegotiation of policy terms to reflect changes in corporate structure; and (4) completion of renewal documentation, including disclosure, for renewal of policies. 145 A performance appraisal prepared for Ms Zolezzi on 5 February 2001, covering the calendar year 2000, stated that her role as Manager, Specialised Insurances required her to "Managed the Specialised Insurance Program (SIP)". Her "performance indicators" in that role comprised the following: (1) coordinate with AMP's business units globally to manage the SIP; (2) maintain relationships with AMP's brokers; (3) ensure that extraordinary and major issues were communicated to the brokers; (4) assess annually the adequacy of the coverage offered by the SIP; (5) arrange annually completion of the proposal for renewal; (6) manage random insurance issues including changes to terms. 146 Performance appraisals for subsequent years indicated similar responsibilities, and mentioned also "[r]enegotiation of insurance to reflect changes in the corporate structure, regulatory requirements etc". 147 In addition, those subsequent performance appraisals referred to Ms Zolezzi's responsibilities in relation to "Specialised Insurances – Annual Renewal" and "Specialised Insurances – negotiation of new changed cover". As to the former, the responsibility was for "annual review SIP"; and as to the latter, the responsibility was "for renegotiation of Insurance Cover". The "performance indicators" for those areas of responsibility (running them together) were: (1) completion of proposals for renewal by business units; (2) consolidation of business units' responses; (3) obtaining approval of the proposal for renewal from the Chief Executive Officer; (4) confirming adequacy of the coverage, including any changes proposed by the brokers; (5) obtaining BCC approval of the proposed renewal terms; (6) obtaining the BCC's instructions in relation to renewal; (7) deal with individual insurance issues as required; (8) deal with "one-off insurance covering special areas, or changes to terms, including premiums negotiated and placed"; and (9) deal with changes to insurances "to reflect changes in the corporate structure… including premiums to be paid". 148 It is unnecessary to go to the detail of the activities performed by Ms Zolezzi in the execution of her responsibilities as Manager, Specialised Insurances. She had regular discussions with AON Australia, meeting them fortnightly. She met representatives of AON UK, and of the underwriters, annually. She arranged business from time to time including (relevantly) the inclusion of Towry Law, as an acquisition, in the SIP. She arranged for notification of claims. She ensured the preparation and completion of the annual proposal for renewal. On at least two occasions Ms Zolezzi, together with AMP's Chief Executive Officer at the time, signed the proposal for renewal. She prepared memoranda for the BCC, and made presentations to them, in relation to the SIP. 149 It is clear that at all material times, and specifically in March 2004, Ms Zolezzi was the person within AMP to whom anyone else in AMP or its subsidiaries would resort for information as to the nature and extent of cover provided by the SIP in general, and the policy in particular. 150 Thus, I conclude that as at 30 March 2004, it was within the scope of Ms Zolezzi's employment and authority to deal with Mr Bloor on the subject of the coverage available to Towry Law under the SIP. It follows that the statements made by Ms Zolezzi in the attachment to her email of 30 March 2004 to Mr Bloor were statements made within the scope of her employment or authority. It follows further that what she said, to the extent that it is relevant, is to be taken as an admission by AMP in these proceedings. 151 Further, although this goes to the weight to be attributed to the admission rather than its admissibility, it is clear that Ms Zolezzi was qualified, by reason of her performance of her duties as Manager, Specialised Insurances (having done this for more than four years as at March 2004) to know, and to express an opinion as to, the understanding that both AMP and its brokers AON had as to the retroactive date limitation imposed by general condition 12(B) in respect of acquisitions. 152 Ms Zolezzi was not called to give evidence, and there is nothing in the evidence to suggest that her understanding as at March 2004, or indeed at any other time was other than as set out in the attachment to her email. Further, the way that the inclusion of acquisitions within the SIP had been handled in previous years supports Ms Zolezzi's understanding. 153 It will be noted that Ms Zolezzi's assessment stated the understanding not only of AMP but also of the brokers. As I have said, it was the defendants' case that the brokers' intention was the relevant intention of AMP, in relation to rectification. 154 It is not necessary to deal in detail with the evidence relating to the brokers' intention (or to the intention of the personnel within AON Australia and AON UK who dealt with the underwriters in connection with the SIP). Nor is it necessary to go in detail to the evidence relating to AON's understanding. It is sufficient to say that: (1) it is clear, on the basis of the dealings between AON and the underwriters in respect of a number of acquisitions before 31 December 1999 (the inception date of the policy), that AON understood that the underwriters' position was that automatic coverage in respect of acquisitions attached from the date of acquisition, and did not have retroactive effect unless the underwriters specifically agreed; (2) on a number of occasions, AON reported this to AMP (presumably, it may have been on the basis of such reports, among other things, that Ms Zolezzi was able to speak as to the brokers' understanding of "the intention of the policy" in relation to the retroactive date in respect of acquisitions); (3) when AON dealt with the underwriters in relation to acquisitions, it did so on the basis that retroactive cover was a matter for negotiation, and did not attach automatically; (4) nothing occurred in relation to the negotiations for the policy (in the period leading up to the scratching of the slip in January 2000) that could have given AON any different understanding; and (5) the plaintiffs did not call any of the relevant AON personnel to give evidence that they had an understanding any different to that revealed by the documents, or statement by Ms Zolezzi. 155 The only documentary evidence of any possibly different understanding within AON is contained in an email from Mr Sean Cray of AON Australia to Mr Jeff Hanson of AON UK. That email was sent during negotiations for the inclusion of a recent acquisition, NPI Limited, within the SIP. There was a particular issue with NPI: the acquisition of "drop down" cover whereby the deductible applicable to NPI would be $250,000.00 rather than the general deductible of $5 million that was applicable unless some contrary amount had been negotiated (as in fact happened from time to time with various subsidiaries of AMP). 156 NPI already had its own insurance with unlimited retroactive coverage and with lower deductibles. Mr Cray was seeking to bring about a position whereby all claims, regardless of the date of occurrence of the events giving rise to them, were handled by the one insurer. Thus, he wanted the underwriters to provide unlimited retroactive coverage to NPI. In this context, he said among other things in his email to Mr Hanson: "Jeff, it is common here when an Insured changes Insurers that the incoming Insurer provides Unlimited Retroactive coverage excluding both Known Claims and circumstances". 157 It is clear that Mr Cray was not stating an understanding relating to the policy but, at most, the position that in his experience commonly applied in the Australian market. There is nothing in the email to suggest that Mr Cray's understanding was that the underwriters were obliged, by the terms of the policy on their proper construction, to provide NPI with unlimited retroactive coverage. On the contrary, it is clear that Mr Cray was proposing arguments for Mr Hanson to put to the underwriters to persuade them to do so. In the event, the underwriters were not persuaded. The slip relating to the NPI deductible had contained the words "[i]t is further understood that no retroactive limitation will apply in respect of NPI Limited". Those words were deleted and the words "Retroactive Date at 31/12/99" inserted. Further, the slip was endorsed "[o]ption to delete RD [retroactive date] and move to DLC 2 – AP [additional premium] A$25000". 158 It may be noted that Mr Cray's understanding may not have been (or may not always have been) as set out in his email. In relation to the acquisition of PWC Financial Planning (also known as "Apollo"), Mr Cray advised Ms Zolezzi, in an email of 30 May 2002, that if "Apollo" were an acquisition under the umbrella of AMP Financial Planning activities, then it would be covered "upon acquisition" but: "Coverage would apply only to claims arising from date of acquisition, there would be no coverage for claims arising from past acts prior to the acquisition… we could seek Underwriters [sic] agreement to provide unlimited retroactive coverage if you require it. I anticipate that should Underwriters grant such coverage an additional premium would be required". 159 During the following month (by email dated 20 June 2002) Mr Cray sent an email to Mr Hanson noting that Apollo "falls within the Acquisition Criteria of the policy". He asked Mr Hanson to "Confirm Underwriters' agreement to cover this entity with effect from the date of acquisition". 160 Mr Hanson provided that confirmation. Mr Cray reported to Ms Zolezzi in an email of 28 June 2006 that confirmation of coverage had been received "subject to policy terms and conditions. As previously advised coverage is effective as of the date of acquisition and does not extend to acts prior to the acquisition date". 161 The relevance of the NPI transaction is limited to endorsement 8 and the shortfall policy, since Mr Cray's email was written not only after the inception of the policy but also in fact after it was signed on 13 June 2000. Nonetheless, when the whole of the transaction is examined, it is clear that the underwriters' understanding of their position was that they were not obliged to grant retroactive cover automatically, but could stipulate for terms (as, by offering the option to delete the retroactive date for an additional premium, they did). 162 To the extent that the intention of AON is to be imputed to AMP, it is clear that AON's subjective intention and understanding were that cover in respect of acquisitions attached with effect from the date of acquisition, and that there would be retroactive coverage (i.e., coverage for claims arising out of matters prior to acquisition) only if underwriters expressly agreed to extend it. 163 Although AMP said that the relevant intention was that of Mr Traill, it relied also on the evidence of Mr David Di Francesco. Both those gentleman made statements in which they deposed to an understanding, or intention, to the effect that relevant acquisitions (as I have defined that term at [81] above) would be automatically covered with unlimited retroactive coverage provided that the requirements as to notification and the like were given; but that this coverage would be subject to a DLC. In my view, that evidence cannot be accepted. 164 As to Mr Traill: he was cross-examined as to his experience from mid 1990 onward in relation to the management of the SIP. He acknowledged, among other things, having been told in 1998 that if a particular acquisition were to be including in the SIP, it would not have automatic retroactive cover (T224-226); and agreed that it was likely that he would have been shown a fax from AON Australia to Mr Di Francesco dated 11 February 1999, in which AON Australia stated explicitly that "[r]etroactive coverage does not apply before the date of acquisition unless specifically agreed by underwriters) (T224 – 225, 256). Mr Traill said of this fax that, had he seen it, he would have appreciated: (1) that it was telling the reader that the effect of general condition 12(B) was that there was no retroactive coverage for acquisitions unless underwriters specifically agreed to this (T256); and (2) that concept of the application of general condition 12(B) applied to all acquisitions, and to indemnity under section IV (T256). 165 Further, Mr Traill had a recollection of having been informed that automatic cover for acquisitions would not be retroactive without the specific agreement of the underwriters, and that this was his understanding, including as to section IV (T227). 166 Mr Traill agreed that, through 1999, 2000 and 2001, it was his understanding that the cover provided to acquisitions such as Henderson & GIO would not be retroactive unless underwriters specifically so agreed. 167 Mr Traill sought to distinguish the Henderson & GIO acquisitions. I do not accept the basis on which he sought to do this. 168 Without further wearying the reader, I do no more than state my conclusion from the whole of Mr Traill's evidence: that he did not have the understanding, as to the retroactive effect of automatic coverage for acquisitions, that he professed in his statement; and that, on the contrary, he well understood that automatic coverage for acquisitions would not have retroactive effect unless the underwriters specifically agreed to this. 169 The same conclusion must be drawn, on even stronger grounds, in the case of Mr Di Francesco. He was cross-examined at length. Again, I will not weary the reader by dealing at length with his cross-examination. I do however note the following elements: (1) ultimately, he accepted that the documents on which he relied, as forming the basis of the understanding set out in his statement, did not specifically (or in some cases at all) support that understanding (see, generally, T280-282, 284); (2) when Mr Di Francesco was shown the wording of general condition 12(B) in the witness box, he was unable to offer any sensible construction that supported his professed understanding (T312-313); (3) when Mr Di Francesco was shown a fax dated 21 December 1998 from AON Australia to him, he said that there was nothing in it inconsistent with his then understanding (T316). That fax included the statement: "we can include GIO Limited from the date of acquisition without these declarations, however, coverage will only apply for loss and/or liability arising from acts which occurred subsequent to the acquisition date"; and (4) Mr Di Francesco ultimately conceded that his understanding in December 1998 was that automatic coverage would not be retroactive unless underwriters specifically agreed, and that if retroactive coverage were required, underwriters would have to be asked for it and agree to give it (T317). 170 At the conclusion of his cross-examination, it was put to Mr Di Francesco that the understanding set out in the relevant paragraphs of his statement was inconsistent with what he had said in cross-examination. He said "I don't believe so" (T317). He was given an opportunity to explain why there was no inconsistency. He failed to do so in any persuasive (let alone responsive) way (T318). 171 I conclude that the assertions made by Messrs Traill and Di Francesco in their statements should not be accepted, and that the evidence given by them in cross-examination (of which I have extracted only a few examples) confirms that their understanding was at all material times that automatic cover extended to acquisitions by virtue of cl 12(B) did not have retroactive operation unless the underwriters, having been asked, specifically agreed to provide it. Further, I am satisfied, on the basis of their evidence in cross-examination, that they understood that this was the understanding of the underwriters and, so far as it is relevant, of AON. 172 It may be noted that my conclusion as to the understanding of Messrs Traill and Di Francesco is entirely consistent with the understanding of "AMP" (and the "brokers") stated by Ms Zolezzi in the attachment to her email of 30 March 2004. 173 If the understanding of Messrs Traill and Di Francesco were as I have concluded it is, it is impossible to see how, in relation to the negotiations for and entry into the policy, their subjective contractual intention could have been as described by them. The underwriters' intention 174 I turn to the question of the underwriter's understanding and intention. The relevant evidence touches also on the question of estoppel. 175 The person within Syndicate SJB 1212 who decided to scratch the slip for the policy was Mr Stephen Burnhope. Mr Burnhope's evidence of his understanding and subjective intention was "that, unless otherwise agreed by Syndicate 1212 at the time of acquisition, businesses acquired by AMP which satisfied the criteria set out in General Condition 12(B) would be automatically covered by the Policy, but that all claims made in respect of those businesses (including professional indemnity claims) based upon acts or events that occurred prior to their acquisition by AMP were excluded from cover" (affidavit sworn 17 November 2006, para 47). 176 I accept Mr Burnehope's evidence, and my reasons for doing so may be stated briefly: (1) in my view, he was a witness upon whose evidence I could rely. I thought that he sought to the best of his ability, and subject to the limits of memory, to give accurate and truthful evidence; (2) there was no direct challenge to his evidence of intention; (3) his evidence of intention is entirely consistent with the history of dealings between AMP (or AON and its behalf) and the underwriters in relation to acquisitions for which coverage was provided under earlier policies; and (4) that evidence is consistent also with the evidence of market understanding, as to the effect of a "retroactive date" limitation, to which I have referred at [69] to [72] above. 177 Mr Pembroke submitted that Mr Burnhope's evidence of intention was no more than "his opinion as to the effect of a provision in a settled policy wording (agreed to by prior leading underwriters) which he adopted when Syndicate 1212 became the lead underwriters on the slip" (written closing submissions, para 93). 178 I do not accept that submission. Mr Burnhope said, and I accept, that when Syndicate SJB 1212 became the leading underwriter, he reviewed the policy wording closely. Indeed, he said, he had particular reason to do so because he had concerns at the approach of the previous lead underwriter to the detail of policy wording. Mr Burnhope said that he had reviewed general condition 12(B) at least twice before scratching the slip for the policy. He understood what it meant – in substance, that the automatic coverage afforded to acquisitions would have effect from the date of acquisition, and would not give cover in respect of claims arising from matters before the date of acquisition unless expressly agreed – and said that this understanding "is based upon my intention for those words which I am very clear on" (T108). 179 The other person within Syndicate SJB 1212 who had involvement in the making of the decision to underwrite the policy was Mr Paul Betts. Mr Betts had no specific memory of considering the policy wording immediately prior to 12 January 2000 (when the slip was scratched on behalf of Syndicate SJB 1212), but said that it was likely that he did so. This he based on his usual practice of closely reviewing policy wordings at renewal time (affidavit sworn 15 November 2006, paragraph 28). 180 Although there is no direct evidence of Mr Betts' actual intention at the time the slip was scratched, I think that his intention can be inferred. Undoubtedly, he had the same understanding of general condition 12(B) as did Mr Burnhope (as to which, see at [175] above.) Mr Betts' usual practice was to review policy wording before deciding to go on risk, and I think it likely that he would have done so in this case. In this context, I should note that Mr Betts impressed me as a careful and conscientious person. I am satisfied that he would have considered the policy wording, and satisfied himself as to its meaning, before making any decision (or participating in any decision) to go on risk. On the assumption that Mr Betts reviewed the policy wording, he would have understood general condition 12(B) in the manner just indicated. On that basis, I think, it is safe to infer that he intended general condition 12(B) to operate according to that understanding. 181 Mr Betts also scratched endorsement 8, on 15 December 2000. There is no reason to think that, as to his intention and understanding in the context of the slip for the policy changed in any material way between 12 January 2000 and 15 December 2001. I should add that Mr Burnhope says that it is "extremely likely" that he himself would have been aware of the circumstances relating to endorsement 8 "if not personally engaged in the negotiations" (see para 63 of his affidavit sworn 17 November 2006). There is no reason to think that Mr Burnhope's understanding or intention changed between 12 January 2000 and 15 December 2000. 182 Another underwriter who gave evidence was Mr Neale Stevenson. Mr Stevenson was a Financial Institutions underwriter employed by SVB Syndicates Limited, the managing agent for Syndicate SJB 1212. He had day to day underwriting responsibility for that syndicate's Australian business, including the SIP. 183 Mr Stevenson's understanding of general condition 12(B) was that if an acquisition were notified to underwriters, and fell within the criteria stated in the condition, it would have automatic cover "subject to a retroactive date limitation" (affidavit sworn 29 November 2006, para 6). Mr Stevenson further understood that the relevant sentence "meant that acquired entities were not covered under the Policy for acts or events that occurred prior to the date of acquisition unless another date was specifically agreed by underwriters" (para 7). Mr Stevenson said further that, in his experience, "[a] retroactive date limitation of that kind has been and is typically contained in automatic acquisitions clauses" (para 7). 184 Mr Stevenson scratched the notification of the acquisition of Towry Law. When he did so, he wrote the words "Noted, sub. [subject to] policy terms and conditions strictly". Thereafter, AON sent further information to Mr Stevenson, which he noted. 185 To the extent that it is relevant, I note that it was Mr Stevenson who scratched a printout of Mr Cray's email to Mr Hanson of 20 June 2002 (see at [159] above), thereby confirming coverage. When Mr Stevenson scratched the email he wrote "noted, sub policy terms and conditions". 186 Other underwriters gave evidence. It is necessary to refer to one only, Mr Geekie. As I have already said, he was the underwriter who scratched the shortfall policy on behalf of Zurich. He said, at para 40 of his affidavit sworn 15 November 2006, that his understanding and intention, at the time he scratched the policy and at the time he scratched the shortfall policy, "was that a retroactive date of cover (being the date of acquisition) would apply to claims made in respect of subsidiaries that were acquired by AMP during the policy period, including claims under Section IV (Professional Indemnity)". (Mr Geekie referred to "the policy" because he scratched it on behalf of Syndicate AST 1207. That syndicate was one of the four "Leading Underwriters" who could bind the follow market in respect of certain risks under the jumbo line slip.) 187 Mr Geekie gave evidence as to why he had that understanding and intention. In substance, he said, he had reviewed the policy wording; he understood general condition 12(B) to operate as others (including Mr Burnhope – see at [175] above – understood it); nothing had been put to him to suggest that general condition 12(B) would operate in a way inconsistent with his understanding; and his understanding was entirely consistent with his knowledge of market understanding and practice. Nor could Mr Geekie "think of any reason why a General Condition would impose a retroactive date in respect of claims made by after – acquired subsidiaries under the Blanket Bond, Electronic and Computer Crime and Special Accidents Sections, but not do so in respect of claims made under the Professional Indemnity Section". On the contrary, Mr Geekie said that if he had to make a choice, he "would restrict the Professional Indemnity section of the policy with a retroactive date and leave the Bond sections unrestricted". See para 41 of his affidavit. 188 There was no challenge to Mr Geekie's evidence of his understanding and intention. Again, he impressed me as a witness who sought to the best of his ability, and subject to the obvious limitations of memory, to give truthful and accurate evidence. I accept his evidence. Communication of intention 189 In my view, it is clear that each party understood that the other was dealing with it on the basis of the subjective intention, as to retroactive coverage, which I have found each party held at the relevant time. Conclusion as to rectification 190 Were it necessary to express a concluded view on rectification, I would conclude that general condition 12(B) should be rectified as proposed by question 2. I accept that this is not the precise form of rectification proposed by the defendants. I accept further that the rectification proposed by them is not available on the evidence. The simple answer to this seems to me to be that, given the clear evidence of subjective intention and communication thereof, the defendants should have leave, to the extent necessary, to amend the relevant paragraphs of their cross-claim summons and list statement. 191 Thus, were it necessary to deal with question 2, it should be answered "yes"; and that answer should flow through (to the extent necessary) to the other questions identified at [132] above save for 16(c), (d) and (f). Those last three questions are excepted because the raise the question of the precise form of the declarations sought. Further, in my view, it is not appropriate to make declarations on what are (having regard to my conclusion on the question of construction) purely hypothetical points. Estoppel 192 As with rectification, my conclusions on the questions of construction mean that it is not necessary to deal with the issue of estoppel. However, and again against the possibility that my conclusion on the question of construction may be wrong, I shall deal with the question of estoppel. 193 The issue of estoppel is raised by questions 3, 5, 8, 10, 15, 16(e) and 16(g). The asserted estoppel 194 The defendants relied upon an estoppel by convention. Their case was that: (1) at all material times up to (and indeed after) the inception date of the policy, the defendants and AMP conducted themselves on the basis of an assumed state of affairs – that the effect of the relevant sentence in general condition 12(B) was that the automatic coverage extended to a relevant acquisition (during the currency of the policy) would not provide indemnity for claims arising out of events that occurred before the date of acquisition unless the underwriters expressly agreed to this; (2) AMP (through AON) knew that the defendants were operating on the basis of that assumption; (3) the defendants would not have underwritten the policy, or the shortfall policy, had they been told that the assumption was incorrect or that AMP did not accept it; and (4) permitting the plaintiffs now to withdraw from the assumption would cause prejudice to the defendants. 195 The parties' submissions addressed the question of "whose assumption" as follows: (1) as to the policy and endorsement 8, on the basis that the issue fell to be determined as between AMP on the one hand and Syndicate SJB 1212 on the other; and (2) as to the shortfall policy, on the basis that the question fell to be determined as between Syndicate SJB 1212 and Zurich on the one hand and AMP on the other. The relevant principles 196 When considering the question of rectification, I referred (at [133] and [134] above) to the decision of the Court of Appeal in Ryledar. That case concerned conventional estoppel as well as rectification. Tobias JA, with whom Mason P and Campbell JA agreed, dealt with the principles relating to conventional estoppel at 644 [194] and following. 197 At 645 [199], [200], Tobias JA referred with apparent approval to the statement of the principles undertaken by Brereton J in Moratic Pty Ltd v Gordon (2007) Australian Contract Reports ¶ 90-255. Brereton J said, at 89, 914 [32], that to make out a case of conventional estoppel it was necessary to show that: (1) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant; (2) the defendant has adopted the same assumption; (3) both parties have conducted their relationship on the basis of that mutual assumption; (4) each party knew or intended that the other would act on that basis; and (5) departure from the assumption would cause detriment to the plaintiff. 198 At 646 [202], Tobias JA confirmed, by reference to the decision of the Court of Appeal in MK and JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 at [72], that reliance and detriment were essential for the existence of conventional estoppel. 199 I do not think that the parties disagreed as to the fundamental basis of the doctrine of conventional estoppel. They appeared to differ as to the necessity (or otherwise) that one party should have induced, or acquiesce in, the other's adoption of the assumption. I propose to approach the question of estoppel on the basis that it is necessary that the party said to be estopped should have induced, or acquiesced in, the other's adoption of the common assumption. That seems to me to be consistent with the basic principles relating to estoppel at law: see for example Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 547, and his Honour's more detailed explication of the principles in Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641 at 674 – 676. It is also consistent with the decisions of the Court of Appeal in Coghlan v SH Lock (Australia) Ltd (1985) 4 NSWLR 158 and Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175. In the former case, see Samuels JA (with whom Hope JA agreed) at 166 – 168. In the latter case, see Samuels JA (with whom Kirby P agreed) at 194, and see McHugh JA at 198. 200 In Moratic, Brereton J suggested at 89, 915 [37] that it was not necessary that one party should have induced, or acquiesced in, the other's adoption of the mutual assumption. That, with respect, does not seem to me to be consistent with the authorities to which I have referred in the preceding paragraphs. In any event, it was not necessary to his Honour's decision in that case, because on any view the relevant conduct "crossed the line between the parties" (to adapt the phrase of Kerr LJ in Kaye Lokumal & Sons (London) Ltd v Lotte Shipping Co Pty Ltd (the "August Leonhardt") [1985] 2 Lloyds LR 28 at 35). I note that Tobias JA in Ryledar did not refer to this aspect of the reasons of Brereton J in Moratic. 201 There is another unresolved question in relation to conventional estoppel. Tobias JA referred to it at 646 [204] and following. That is whether the parol evidence rule prevents a finding of conventional estoppel based on pre-contract negotiations which culminate in a written contract (see for example McClelland J in Johnson Matthey Ltd v AC Rochester Overseas Corporation (1990) 23 NSWLR 190 at 195 – 196; and Bryson J in Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 at 279 [52]). 202 Tobias JA referred to the discussion of this point in the authorities and texts, but found it unnecessary to resolve the issue. Since it was not raised in the submissions before me, I do not propose to attempt to do so. I do however note that the view expressed by McClelland J relates to the exclusion of evidence of pre-contract negotiations for the purpose of proving an alleged estoppel by convention. In this case, the material relied upon is evidence of the way that (the defendants say) AMP and the underwriters conducted themselves from time to time, in relation to general condition 12(B) as it appeared in the earlier policies. This may not be a distinction of great significance if the exclusionary rule is wider (as to which, see for example McPherson JA in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2006] QCA 194 at [30] and Handley, Estoppel by Conduct and Election (Thompson Sweet and Maxwell, 2006) at 124. McPherson JA suggested that there was an exclusionary rule, and that it applied to a common assumption falling short of contract at odds with an express contract that was made, whereas Handley, whilst putting the matter in terms of pre-contract convention, expressed the opinion that it could support an estoppel notwithstanding the terms of a subsequent express contract. The parties' submissions 203 Mr Meagher referred to a number of transactions in which, he submitted, AMP (through AON) and the underwriters from time to time (through Syndicate SJB 1212) had dealt with each other on the basis that acquisitions made since the inception of the relevant policy would not have retroactive cover (that is, prior to the date of acquisition) unless the underwriters specifically agreed to give such cover. 204 As to reliance, Mr Meagher referred to the evidence of Mr Burnhope, Mr Betts and Mr Stevenson. As I have noted, each of them said in substance that he understood general condition 12(B) to give automatic coverage to acquisitions that fell within the criteria stipulated or referred to in the general condition, but that such cover would not have retroactive effect (i.e., would not give cover for claims arising from events that occurred prior to the date of acquisition) unless the underwriters specifically agreed to extend such cover. 205 Further, each of Mr Burnhope and Mr Betts said in substance that if he had been told that AON or AMP took the view that the cover afforded to acquisitions pursuant to general condition 12(B) included automatic unlimited retroactive cover, he would have sought to clarify the wording and, absent clarification, would not have written the policy or scratched endorsement 8. 206 The evidence referred to at [204] was challenged, to the extent that it was put to each of the witnesses, and they accepted, that in the event of a dispute as to the proper interpretation of general condition 12(B), it would mean whatever a court said it meant. That does not seem to me to detract in any relevant way from this aspect of their evidence. 207 The evidence referred to at [205] was not challenged. 208 As to detriment, Mr Meagher submitted that departure from the common assumption would cause detriment to the underwriters because the unchallenged evidence (to which I have referred) is that the policy would not have been written, and if written would not have been extended (through endorsement 8) had the common assumption been challenged. 209 Mr Pembroke submitted that the assumption or understanding as to the operation of the policy arose independently of any conduct on the part of AMP. Specifically, he submitted, the relevant underwriters (Mr Burnhope in relation to the policy itself; Mr Betts in relation to endorsement 8; Mr Stevenson in relation to the Towry Law acquisition; and Mr Geekie in relation to the shortfall policy) had an understanding of the effect of general condition 12(B) quite independent of anything said or done by AMP, or for that matter by AON. That may be so in relation to the precise assumption that I have identified. But the assumption in question is not limited to an assumption as to the meaning of general condition 12(B). It is said to be an assumption that the parties (AMP and the underwriters) conducted their affairs, in relation to the policy and their dealings under it, on the basis of that understanding. 210 Mr Pembroke submitted further that: (1) Towry Law was not a privy of AMP, and so was not bound by any estoppel binding on AMP; (2) to the extent that the underwriters may have acted on an assumption as to the meaning of general condition 12(B), neither AMP nor Towry Law did anything to induce them to hold that assumption; (3) in any event, Towry Law became a party to the policy, at the latest, by participating in the 2001 annual review: by reason of which, Mr Pembroke submitted, Towry Law ratified the policy; and (4) the transactions on which the defendants relied, as showing the operation of the relevant assumption (i.e., as showing that the parties conducted themselves on the basis that they were bound by that assumption) were equivocal. In this respect, Mr Pembroke submitted that; (i) in some cases, the manner in which the relevant underwriter dealt with the transaction was inconsistent with the case that the defendants now seek to put; and (ii) more generally, there was nothing in the circumstances of those transactions which could lead to the conclusion that AMP (or, to the extent that it is relevant, Towry Law) played any part in inducing the relevant assumption. 211 Finally, Mr Pembroke submitted that: (1) the conduct was not consistent only with the holding of the alleged assumption; (2) there was no evidence of any intention that the conduct was intended to form the basis of an assumption that would qualify or govern the legal relationship between the parties; (3) there was no evidence that AMP shared the assumption alleged by the underwriters; and (4) there was no injustice to the underwriters in insisting on the proper construction (as Mr Pembroke put it) of the relevant sentence, because the underwriters had always accepted that, in the event of a dispute, they would be bound by the construction that a court put on that sentence. Decision 212 Were it necessary to decide the question of conventional estoppel, I would answer it in favour of the defendants. In brief, the reasons for doing so are as follows: (1) for the reasons that I have given in dealing with the question of rectification, AMP (including through its relevant officers Mr Traill and Mr Di Francesco) understood that general condition 12(B) operated in the manner set out at [194 (1)] above; (2) in those circumstances, it is not only open but proper to infer that AMP conducted itself on the basis that general condition 12(B), and its equivalents in prior policies, so operated; (3) the underwriters from time to time had the same understanding and intention, and conducted their dealings with AMP in relation to the policy and its antecedents on the basis of that understanding; (4) the understanding that each (i.e., AMP on the one hand and the underwriters on the other) held was communicated to the other from time to time by dealings in respect of acquisitions that attracted cover under general condition 12(B) or its equivalents in earlier policies; (5) each party understood that the other intended that the relationship between them, in terms of the policy and its antecedents, would be governed by that assumption; (6) the plaintiffs are relevantly privies of AMP. They derive their entitlement to indemnity through AMP. Their entitlement to indemnity can be no greater than the entitlement of AMP; (7) the question of ratification is irrelevant. The plaintiffs became entitled to indemnity under the policy by the operation of (and subject to the terms of) general condition 12(B), not by ratification; and (8) the defendants would suffer prejudice if the plaintiffs or AMP were permitted to depart from the assumption. It is clear from the evidence of Messrs Burnhope and Betts that, had they known that the assumption was incorrect, or challenged, they would have sought to clarify it; and that if it had not been clarified they would not have agreed to provide indemnity. Thus, if the plaintiffs or AMP are to be permitted to withdraw from the assumption, the defendants will be held to a contract that they would not have made. It should be noted that this applies not only to the plaintiffs but to every subsidiary acquired by AMP during the currency of the policy (as extended by endorsement 8). 213 The parties' submissions referred in enthusiastic detail to the intricacies of the various acquisitions to which general condition 12(B), as it stood from time to time, had applied. I do not propose to go into the detail of those acquisitions or their intricacies. I do however refer to what I have said at [154(1), (3)] above (as to AON), [164] to [168] above (as to Mr Traill) and [169(3), (4)] above (as to Mr Di Francesco). 214 I will add only that I have considered the detail of the various transactions to which the parties referred, and their submissions on them. Both because this issue is hypothetical and because the resolution of the competing submissions as to those transactions involves no question of credibility, but merely the drawing of inferences from uncontested documents, I do not propose to burden the reader with an analysis of the transactions or the submissions relating to them. It is sufficient to say that they support the position for which Mr Meagher contended. Specifically, to the extent that it is necessary that AMP should have induced or acquiesced in the underwriters' adoption of the assumption, the course of dealings in relation to acquisitions over the years makes it plain that this requirement is satisfied: at least, as a matter of acquiescence. 215 Were it necessary to express a concluded view on conventional estoppel, I would conclude that the defendants had made good their case that the parties were governed by an estoppel in the terms set out at [194(1)] above. 216 Thus, were it necessary to answer question 3, it should be answered "yes"; and that answer should flow through (to the extent necessary) to the other questions identified at [193] above save for 16(e) and 16(g). As to the excepted questions, I repeat that I do not think that it is appropriate to make declarations on what are purely hypothetic points. 217 I do note that question 15 relates to the alleged statutory contract said to arise under s 58(3) of the Insurance Contracts Act 1984 (Cth). It seems to have been common ground that any estoppel binding the parties in respect of the policy would also bind them (and to the same extent) in respect of any such statutory contract. Who is bound by endorsement 8? 218 This issue is raised by question 12. It is convenient to refer to the underwriters in question (the 11th, 17th and 24th defendants) as "the omitted underwriters". 219 It is common ground that the omitted underwriters did not scratch or otherwise themselves agree to be bound by endorsement 8. The plaintiffs' case is that the omitted underwriters are bound to endorsement 8 because: (1) the omitted underwriters were parties to the jumbo line slip, and bound by the acts of any two of the Leading Underwriters named in that slip within the scope of the authority given by that slip; and (2) two of those Leading Underwriters scratched endorsement 8, and thereby bound the omitted underwriters; Relevant terms of the jumbo line slip 220 The jumbo line slip applied to "declarations attaching during the period from 1 March 1999 to 28 February 2002. It included the following conditions: (1) Each declaration to be accepted and rated by the Leading Underwriter only, such acceptance being binding on all other Underwriters hereon. All amendments, alterations, and endorsements relating to declarations hereon to be agreed by the Leading Underwriter only, such agreement being binding on all other Underwriters hereon… …. (4) Agreed maximum period of any declaration shall be 36 months, plus odd time, plus any discovery protection (not to exceed 72 months). Standalone run-off policies may be issued (not to exceed 72 months). Declarations to run to natural expiry unless cancelled by the Leading Underwriter on each individual declaration in accordance with the terms and conditions of such declaration. … 221 It is common ground that the omitted underwriters had scratched, and thus were bound by the terms of, the jumbo line slip when endorsement 8 was scratched on 15 December. The parties' submissions 222 Mr Pembroke submitted that endorsement 8, according to its terms, had effect from 31 December 2000 up until 31 December 2003. Thus, he submitted, the contract created when the Leading Underwriters scratched endorsement 8 was of 36 months' duration. Mr Pembroke submitted that it was not appropriate to treat endorsement 8 as having a four year term (because, relevantly, its effect was to increase the policy period to four years), or to aggregate the two three year periods (one under the slip and the policy, and the other under endorsement 8) so as to create a period of more than 36 months. 223 Mr Meagher submitted that: (1) endorsement 8 extended the period of the policy to 48 months, and thus was not authorised by condition 4; (2) nothing in the slip for the policy authorised an extension beyond 90 days (this appears to be clear, from the terms of the slip); and (3) in any event, endorsement was not itself a "declaration". In this respect, he submitted, the jumbo line slip itself distinguished between declarations on the one hand and amendments, alterations or endorsements on the other. Decision 224 The expression "declaration" is not defined in the jumbo line slip (or elsewhere). It seems to be the case that a "declaration" is something in the nature of a proposal put to the Leading Underwriters for their acceptance (or otherwise), although it also appears to be the case that the word is used in the jumbo line slip to describe such proposals once accepted (or "attaching"). Condition 1 refers to declarations being "accepted and rated", and says that it is the acceptance (presumably, rather than the declaration) that is binding on other underwriters. 225 Again, condition 1 contemplates someone who is the Leading Underwriter (as defined) doing certain things "for the purpose of binding declarations attaching to this lineslip". 226 Condition 3 suggests that the process of declaration may have some element of reciprocity: "3. Declarations may be bound hereunder by AON Group Limits Authorised Staff on terms quoted by the Leading Underwriter subject to the advice to the Leading Underwriter within 72 hours… 227 Those provisions suggest that a "declaration" is something in the nature of an accepted proposal for cover that becomes binding either because it is accepted by the Leading Underwriter as defined or because, the Leading Underwriter having offered conditions, those conditions are accepted by the Authorised Staff of AON. 228 However, as regards the omitted underwriters, the policy itself was brought into effect as a declaration accepted under the jumbo line slip. Thus, I think, in terms of condition 1, endorsement 8 is to be regarded as an amendment, alteration or endorsement relating to that declaration. The terms of the slip (for the policy) did not authorise the Leading Underwriters under the jumbo line slip to agree to extensions beyond 90 days. I do not think that condition 1 of the jumbo line slip should be construed as giving the Leading Underwriters some greater authority. 229 Further, if it is correct to regard endorsement 8 as an amendment, alteration or endorsement to the policy, it would not be correct to regard it independently as a declaration in its own right. 230 For those reasons, I conclude that question 12 should be answered "none". Section 58 231 The operation of s 58 of the Insurance Contracts Act is raised, in respect of the omitted underwriters, by question 13. 232 So far as it is relevant, s 58 reads as follows: 58 Insurer to notify of expiration of contracts of general insurance (1) In this section, renewable insurance cover means insurance cover that: (a) is provided for a particular period of time; and (b) is of a kind that it is usual to renew or for the renewa l of which it is usual to negotiate. (2) Not later than 14 days before the day on which renewable insurance cover provided under a contract of general insurance (in this section called the original contract ) expires, the insurer shall give to the insured or a person acting as agent for the insured a notice in writing informing the person to whom the notice is given of the day on which and the time at which the cover will expire and whether the insurer is prepared to negotiate to renew or extend the cover. (3) Where: (a) an insurer has failed to comply with subsection (2); and (b) before the original contract expired, the insured had not obtained from some other insurer insurance cover to replace that provided by the original contract; then, by force of this section, there exists between the parties to the original contract a contract of insurance that provides insurance cover as provided by the original contract, except that the cover provided is in respect of the period that: (c) commences immediately after the insurance cover provided by the original contract expires; and (d) expires, unless the contract is sooner cancelled, at: (i) the expiration of a period equal to the period during which insurance cover was provided by the original contract; or (ii) the time when the insured obtains from the original insurer or some other insurer insurance cover to replace that provided by the original contract; whichever is the earlier. … 233 It was common ground that each of the individual contracts embodied in the policy was a contract of general insurance. It was also common ground that none of the omitted underwriters served a notice of the kind referred to in s58(2). The real question is whether each such contract was "of a kind that it is usual to renew or for the renewal of which it is usual to negotiate". The parties' submissions 234 Mr Pembroke relied on the renewals (of the SIP, and in particular the policy as it stood from time to time) that took place in 1995, 1996 and 1999. He said that those negotiations demonstrated that "[t]he policy is of the type that it was usual to renew by way of negotiation" (closing submissions, para 179). 235 Mr Meagher submitted that there was not one policy, or one contract. There were instead a number of individual policies, or contracts: there being separate contracts between each underwriter and AMP. He submitted further that, whilst it was no doubt usual to expect that there would be negotiations for the renewal of the overall cover, those negotiations would not take place on an individual basis, between AMP and each individual underwriter (some of whom carried only $1.75 million or $3.5 million of the total risk, over a general deductible of $5 million, of $200,000,000.00). Decision 236 It is correct to say, as a matter of legal analysis, that there is not one policy, but rather a number of individual contracts of insurance: one contract between each underwriter and AMP. It is correct to say, as a matter of fact, that the negotiations for renewal that occurred were negotiations with the leading underwriters for the renewal of the overall cover. There was no negotiation between AMP (itself or through AON) on the one hand, and individual underwriters (apart from the legal underwriters) on the other. AON negotiated terms with the lending underwriters. Once those terms had been settled, the leading underwriters took the slip to the market. 237 It is also correct to say that the negotiations for renewal that occurred over the period 1995 to 1999 were conducted with the leading underwriters, not with individual underwriters. Once the terms of the "renewal" were settled as between AON and the leading underwriters, the leading underwriters took the slip to the market. 238 In those circumstances, I conclude that none of the individual contracts of insurance made between each of the individual underwriters on the one hand and AMP on the other was "renewable insurance cover" for the purposes of s 58. 239 Question 13(a) should be answered "no". Question 13(b) should be answered "does not arise". 240 That leads back to question 14. It is predicated on an affirmative answer to question 13, and thus should be answered "does not arise." If question 14 did arise then, for the reasons given above at [74] to [103], I would conclude that it should be answered "yes". 241 The answer to question 14 means that the answer to question 15 is "does not arise". If question 15 did arise, then for the reasons given at [212] to [214] above (and noting [215]), I would conclude that it should be answered "yes". Summary of conclusions 242 I set out the conclusions that I have reached: (1) Question 1 should be answered "yes". (2) Question 2 should be answered "does not arise"; but if it did arise, it would be answered "yes". (3) Question 3 should be answered "does not arise"; but if it did arise, it would be answered "yes". (4) Question 4 should be answered "yes". (5) Question 5 should be answered "does not arise"; but if it did arise, it would be answered "yes". (6) Question 6 should be answered "yes". (7) Question 7 should be answered "does not arise"; but if it did arise, it would be answered "yes". (8) Question 8 should be answered "does not arise"; but if it did arise, it would be answered "yes". (9) Question 9 should be answered "yes". (10) Question 10 should be answered "does not arise"; but if it did arise, it would be answered "yes". (11) Question 11: the parties agreed that question 11 should be answered "3 August 2001 ." (12) Question 12 should be answered "none". (13) Question 13(a) should be answered "no". Question 13(b) should be answered "does not arise". (14) Question 14 should be answered "does not arise"; but if it did arise, it would be answered "yes" (15) Question 15 should be answered "does not arise"; but if it did arise, it would be answered "yes". (16) Questions 16(a), (b) and (f) should be answered "yes". (17) Questions 16(c) and (d) should be answered "no". (18) Questions 16(e) and (g) should be answered "no". 243 The conclusions to which I have come mean that the plaintiffs' claim against the defendants must fail, and the plaintiffs' proceedings must be dismissed. 244 The defendants are entitled to some (but not all) of the declaratory relief sought by them in their cross-claim. Orders 245 I direct the answers that I have given to the separate questions to be recorded. 246 I direct the parties to bring in short minutes of order to give effect to the conclusions that I have reached. Those short minutes of order should deal both with the relief to which the cross-claimants are entitled on their cross-claim and with the question of costs. Those orders are to be provided electronically to my Associate by 30 January 2009. If the parties cannot agree on the orders to be made (including as to costs) then they are to provide electronically the orders for which they contend, together with a written outline of their submissions in support of those orders. That is to be done by 13 February 2009. 247 I stand the proceedings over to 18 February 2009 at 9:30 am. I will deal with any disagreements, either as to the form of order or as to costs, on that occasion. ********** 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.