Supreme Court New South Wales Medium Neutral Citation: Bechini v IUS Pty Limited (ABN 93 003 359 279 (In Liquidation) [2019] NSWSC 427 Hearing dates: 21 June 2018 Date of orders: 16 April 2019 Decision date: 16 April 2019 Jurisdiction: Common Law Before: Rothman J Decision: (1) The answers to the questions posed for separate determination pursuant to the terms of Uniform Civil Procedure Rules 2005 (NSW) r 28.2 are as follows: (a) First Question: Whether the term pleaded at [31(b)] of the Further Amended Statement of Claim is a term of the Lumley First Policy (defined at [27] of the Further Amended Statement of Claim)? Answer: Yes, provided that the claim does not arise from or in connection with facts or circumstances that IUS knew or ought reasonably to have known prior to the Insurance Period might or could give rise to a claim; (b) Second Question: Whether the term pleaded at [31(c)] of the Further Amended Statement of Claim is a term of the Lumley First Policy? Answer: Yes, again provided that the claim does not arise from or in connection with facts or circumstances that IUS knew or ought reasonably to have known prior to the Insurance Period might or could give rise to a claim and further provided that there was in place a relevant contract of insurance from 23 March 2008 until notification to IUS in the week following 29 July 2008; (c) Third Question: Whether the matters pleaded and particularised at [35C] of the Further Amended Statement of Claim amount to a "Claim" within the meaning of the Lumley Second Policy (defined at [27] of the Further Amended Statement of Claim)? Answer: No; (d) Fourth Question: If the answer to separate questions (a) and (b) is "no": ought the Lumley First Policy be rectified by the inclusion of the Proposal Form submitted to the second defendant of p 2 of the Proposal Form submitted to the first defendant for completion and, if rectified what are the answers to questions (a) and (b)? Answer: The question does not strictly arise. On one view of this question, it is a hypothetical, which is answered in the following way: if the second page of the Proposal Form is not otherwise part of the Proposal and, as a consequence, not part of the Lumley First Policy, then the documents, being the Lumley First Policy and the Proposal Form submitted will be rectified by the inclusion of p 2 of the Proposal. If so rectified, the answers to questions posed at (a) and (b) are answered in exactly the same terms as the answer to the first question and the second question above in this Order. (2) The Court will hear the parties on costs and reserves costs pending any application in accordance with directions to be given. Catchwords: INSURANCE – substantive proceedings suit for professional negligence – separate question determined as to construction of insurance documents – Proposal from Broker on letterhead of Insurer – express provision in Policy wording that Policy include Proposal – whether Proposal includes only document completed by insured or entire document sent to insured – insured returned document but accidentally omitted p 2, being a typewritten pro-forma – held Proposal was whole document – included p 2 whether or not it was returned – if not, then contract document should be rectified Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 12GF Insurance Contracts Act (1984) (Cth), s 40(3) Cases Cited: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500; [1986] HCA 82 Deaves v CML Fire and General Insurance Co Ltd (1979) 143 CLR 24; [1979] HCA 12 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125; [1975] HCA 55 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Prudential Insurance Co v Inland Revenue Commissioners [1904] 2 KB 658 Pukallus v Cameron (1982) 180 CLR 447; [1982] HCA 63 R v Isaac; Ex parte Transport Workers' Union of Australia (1985) 159 CLR 323; [1985] HCA 80 Re Our Town FM Pty Limited and Newcastle Stereo Radio Pty Limited v Australian Broadcasting Tribunal and Newcastle Pty Limited (1987) 16 FCR 465; [1987] FCA 479 Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93; [1957] HCA 10 Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) (2016) 129 FCR 12; [2016] FCAFC 15 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Category: Principal judgment Parties: Julian Bechini (First Plaintiff) Michelle Bechini (Second Plaintiff) IUS Pty Limited (ABN 93 003 359 279) (In Liquidation) (First Defendant) WFI Insurance Limited (formerly known as Lumley General Insurance Limited (ACN 000 036 279) (Second Defendant) M&R Insurance Brokers Pty Limited (ACN 005 433 287) (Third Defendant) Representation: Counsel: J W Dodd (Plaintiffs) No appearance (First Defendant) S Gray (Second Defendant) D Lloyd (Third Defendant) Solicitors: HBA Legal (Plaintiffs) Moray & Agnew Lawyers (Second Defendant) Lander & Rogers Lawyers (Third Defendant) File Number(s): 2013/14677 Judgment 1. HIS HONOUR: The issue with which the Court is required to deal is an issue relating to an alleged irregularity in an insurance policy document sent by the Broker (the third defendant) to the Insurer (the second defendant). In the substantive proceedings, the plaintiffs, by a Second Further Amended Statement of Claim, filed 3 October 2017, seek damages for breach of contract and/or negligence both at common law and pursuant to s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (hereinafter "the ASIC Act"). 2. Further, the Second Further Amended Statement of Claim seeks rectification of the First Lumley Policy by the inclusion of p 2 of the Proposal Form issued by the third defendant in the name of the second and third defendant, being a document completed by the first defendant. Facts 1. The parties have agreed on the following facts: "1. Mr Julien O'Brien holds a Diploma in Financial Services, which he obtained in approximately 2004. 2. Mr O'Brien has worked at M&R Insurance Brokers Pty Ltd, the third defendant (M&R), since February 2004, where he is responsible for the Professional Indemnity Insurance portfolio. This portfolio is predominately comprised of Architects and related construction professionals. Prior to this he worked in the insurance industry since January 1999 in a variety of underwriting roles. 3. On or about 9 February 2007, Mr Renato Ius (Mr Ius) or an employee of IUS Pty Ltd (IUS), the first defendant, approached M&R for a quote for professional indemnity insurance for the 2007/2008 Policy Period. 4. At or about this time, IUS provided a copy of an Aon Risk Services Australia Ltd (Aon) Architects Professional Indemnity Insurance 2005 Proposal Form for IUS (2005 Proposal Form). A true and correct copy of 2005 Proposal Form is in the Court Book at pages 1 to 6. 5. At 1.58pm on 9 February 2007, Mr O'Brien sent an e-mail to Megan Corbett of IUS at the email address 'yellow.thunder@ius.net.au' with the subject line 'Professional Indemnity Insurance - Indicative Pricing' and attaching: (a) a 2007-2008 insurance schedule, file name 'Insurance Schedule 2007-2008.doc'; (b) a Dual Australia and MR Architects Wording, file name 'DUAL Australia and MR Architect Wording_11(02 07).pdf'; and (c) a Dual Australia and MR Proposal Form, file name 'Dual Australia and MR Proposal Form (11 06).doc'. 6. A true and correct copy of the above email and attachments are in the Court Book at pages 7 to 35. 7. On 20 February 2007, Mr O'Brien sent an e-mail to Megan Corbett of IUS. A true and correct copy of this is in the Court Book at page 36. 8. On 23 March 2007 at approximately 12:26pm, M&R received a copy of a signed quote acceptance from IUS via facsimile. A true and correct copy of this document is in the Court Book at page 37. 9. On 23 March 2007 at approximately 4:15pm, M&R sent an email to Dual Australia requesting that cover be provided to M&R's client as per an attached closing advice form. A true and correct copy of this email and the attachment is in the Court Book at pages 38 to 41. 10. On 26 March 2007, Mr O'Brien received the email appearing at pages 42 to 43 of the Court Book. 11. On 26 March 2007, Mr O'Brien sent the email and the attachments appearing at pages 44 to 67 of the Court Book. 12. On 26 March 2007, Mr O'Brien received the email first appearing in the email chain at pages 68 to 70 of the Court Book. 13. On 26 March 2007, M&R issued a letter to IUS enclosing: (a) Insurance Schedule dated March 2007; (b) an invoice for the premium; (c) Premium Funding Application; 14. A true and correct copy of this letter and the first and third attachments is in the Court Book at pages 71 to 82. 15. As at 2007 it was Mr O'Brien's usual practice in respect of Dual Australia proposal forms to: (a) transpose the information in the proposal form received from the intending insured into a work sheet provided by Dual Australia for completion (Work Sheet); (b) send a full copy of the completed proposal form along with a copy of the completed Work Sheet to Dual Australia requesting that cover be confirmed; and (c) send a copy of the proposal form completed by an insured in the form received from the insured as soon as possible without excluding any pages. 16. Mr O'Brien did not follow this practice in respect of paragraph 15(a) above in respect of the document appearing at pages 89 to 92 of the Court Book. 17. On 29 March 2007 at 1.55pm Mr O'Brien received an e-mail with the subject line 'FW: IUS Pty Ltd - Professional Indemnity Insurance 07-08' from Robert O'Brien. The e-mail from Robert O'Brien forwarded an e-mail from Megan Corbett dated 29 March 2007 with the subject line: 'IUS Pty Ltd - Professional Indemnity Insurance 07-08' at 1.44pm and its attachment. A true and correct copy of the e-mail from Megan Corbett and the attachment is in the Court Book at pages 83 to 87. 18. On 29 March 2007 at 2.39pm Mr O'Brien sent an email to Dual Australia Pty Ltd (Dual) attaching the attachment he had received from Robert O'Brien. A true and correct copy of the e-mail from Mr O'Brien and the attachment is in the Court Book at pages 88 to 92. 19. On or about 10 April 2007, M&R sent a letter to IUS enclosing a copy of the policy certificate as received by Dual, the policy schedule and policy wording for the 2007/2008 Policy Period. A true and correct copy of this letter is in the Court Book at page 111. 20. On or about 24 January 2008, Mr O'Brien sent an email to IUS enclosing a copy of an offer of renewal of terms. A true and correct copy of the email sent by Mr O'Brien and the attachments is in the Court Book at pages 112 to 121. 21. On or about 27 March 2008, Mr O'Brien sent an email to Dual attaching a lapsing notice. A true and correct copy of the e-mail from Mr O'Brien and the attachment is in the Court Book at pages 122 to 126." 1. Further to the foregoing facts, evidence has been adduced from Mr Renato Ius, a Director of the first defendant and his Administrative Assistant, Ms Megan Corbett. 2. The evidence of Mr Ius is that a system was in place in or about March 2007 that was to the following effect. If a document was received by Ms Corbett, which document required his signature or completion, as far as he was aware, the document would be given to him, in its entirety, and he would read it and sign it. 3. Mr Ius was unaware of any practice of Ms Corbett omitting any pages from documents, which she had received, and which required Mr Ius' signature. 4. Mr Ius' expectation, arising, amongst other things, from the degree to which he considered Ms Corbett a competent employee, was that Ms Corbett would not have omitted any pages from any document that required signature. 5. Mr Ius signed the last page of the Architect's Proposal Form (hereinafter "the Proposal Form") on 29 March 2007. His usual practice was that he would give the Proposal Form in its entirety to Ms Corbett for sending on to the appropriate persons. 6. As earlier stated, Ms Ius' usual practice, as at March 2007, was to sign any documents that required signing; and return the entire document to Ms Corbett, with instructions as to where to send the document. 7. Mr Ius noted, in his evidence, that the second of the five pages of the Proposal Form, in the format pp 31-35 of the Court Book is not among the attachments. He has no explanation for that omission. He would not have deliberately excluded it when he signed the document. 8. Further, Mr Ius did not intend for the second page to be excluded from the Proposal Form he gave to Ms Corbett. Excluding any part of that Proposal Form would have been against his usual practice. 9. Ms Corbett essentially corroborated the evidence of Mr Ius. While, not unexpectedly, Ms Corbett has no independent recollection of the precise document, either receiving it or sending it, Ms Corbett is aware from records that, on 26 March 2007, she received a letter from Mr O'Brien attaching a number of documents. 10. Ms Corbett's usual practice as at March 2007, was that, if she received a document, which required Mr Ius' signature, she would give the entirety of that document to him. She did not have any practice of omitting any pages from documents which she received and which required his signature. In particular, she attests to the fact that she knows nothing about insurance and that, as a consequence, she would not have been reading or amending documents received in relation to insurance. 11. She attests to the fact that Mr Ius signed the last page of the Proposal Form on 29 March 2007. She corroborates the usual practice to which Mr Ius attests and which is described above. Further, she says there is no reason, to her knowledge, to believe that when she gave that form to Mr Ius, she followed any practice other than her usual one in relation to giving him the entire document. 12. Further, Ms Corbett corroborates Mr Ius' description of the usual practice from his perspective, namely, that having signed the document, Mr Ius would return the entire document to her with instructions about where to send the document. 13. On 29 March 2007, Ms Corbett sent an email with attachments to Mr O'Brien. There is no reason to believe, from Ms Corbett's perspective, that Ms Corbett followed anything other than her usual practice, as at March 2007, which was, in relation to a document which Mr Ius had signed, to fax or to email the entire document and not to omit or to exclude any pages. 14. Ms Corbett, also, cannot explain the missing "second page" of the Proposal Form in the Court Book. Ms Corbett cannot think of any reason why she would have deliberately excluded it, as it would be against her usual practice. There is minimal extra time involved in scanning five pages, rather than four. 15. The reference in the foregoing evidence to the page numbers of the Court Book relates to an earlier version of the Court Book ultimately supplied to the Court. The returned email attached to the facsimile from Ms Corbett to Robert O'Brien and sent at 1:44 PM on Thursday, 29 March 2007 is found in the Court Book commencing at p 83. Page 83 of the Court Book is the email and p 84 is the commencement of the attachment. It is necessary to describe the Proposal Form. 16. As stated in the evidence of Mr Ius and Ms Corbett, the second page of the Proposal Form was not returned to Mr O'Brien as part of the attachment. The terms of the allegedly omitted page is before the Court at Court Book, p 32. The page in question is part of a pro forma explanation, no part of which is required to be completed by the proposer. 17. The document itself is referred to as the "Architects Proposal Form, Professional Indemnity Insurance". Page 1 is headed "Important Notice Relating to this Proposal" and then has, in upper case, the following statement: "PLEASE READ THE FOLLOWING ADVICE BEFORE PROCEEDING TO COMPLETE THIS PROPOSAL FORM." 18. Page 1 of the Proposal Form deals with the fact that the Policy is issued on a claims made basis, which is explained in the page. It then deals with the duty of disclosure. The contents of the second page, which, as earlier stated, is said to have been missing from the document returned by Ms Corbett to Lumley, deals with the following subject matter: nondisclosure; surrender or waiver of any right of contribution or indemnity; notice of occurrence or events; contract by the insured affecting rights of subrogation; and a privacy statement. The terms dealing with surrender or waiver and notice of occurrence should be recited and are in the following terms: "Surrender or Waiver of Any Right of Contribution or Indemnity Where another person or company would be liable to compensate you or hold you harmless for part or all or [sic, read 'of'] any loss or damage otherwise covered by the policy, but you have agreed with that person either before or after the inception of the policy that you would not seek to recover any loss or damage from that person, you are NOT covered under the policy for any such loss or damage. Notice of Occurrence or Events If during the period of this policy, the Insured shall become aware of any occurrence which may give rise to a Claim under the policy and shall during the period of this insurance given [sic, read 'have given'] written notice to the Insurer of such occurrence, any Claim which may be subsequently made arising out of the occurrence of which notification has been given shall be deemed to be a Claim made during the period of this policy whenever such Claim may actually be made." 1. The second page of the Proposal Form also includes the following statement: "This proposal form does NOT BIND the Proposer to complete the insurance but will form part of any insurance". 1. In the course of the Privacy Statement, there is a reference to the information provided in "this Proposal Form (including any supplementary documentation)". 2. The third and subsequent pages are pages that require completion by or on behalf of the proposer or insured (both terms are used in the Proposal Form). The information is not particularly relevant to the determination of the issues on this question but includes the details of the proposer; the professional business, its earnings and the source of those earnings; whether sub consultants are utilised; whether there is any interest in real estate; past financial year gross fees or income and the state of Australia in which they were earned; whether any fees were earned outside of Australia; the five largest contractual projects undertaken by the insured; and information relating to any and all employees. 3. At the conclusion of the completed document there is a declaration in the following terms: "Section 6: DECLARATION SIGNING THIS PROPOSAL FORM DOES NOT BIND THE PROPOSER OR THE INSURER TO COMPLETE THIS INSURANCE The undersigned declares that the statement and particulars in this proposal form are true and that no material facts have been misstated or suppressed after enquiry. The undersigned agree that should any of the information given by us alter between the date of this proposal and the inception date of the insurance to which this proposal relates, the undersigned will give immediate notice thereof. The undersigned agrees that the Underwriters may use and disclose our personal information in accordance with the 'Privacy Statement' at the beginning of this Proposal. The undersigned agrees that this proposal, together with any other information supplied by us shall form the basis of any contract of insurance affected thereon." 1. Following that declaration there is an appropriate place in the document for the signature, name and position of the person signing and proposing the insurance. 2. As earlier stated, the Proposal Form was signed and sent to Mr O'Brien on 29 March 2007. It was a proposal for the coverage of IUS Pty Ltd (hereinafter "IUS") for Professional Indemnity Insurance for the period 2007-2008. The insurance was renewed on 20 March 2008 for the period 2008-2009. Question before the Court 1. Presently, the Court is concerned with the determination of four separate questions. Those questions were, by order of the Court, separated before determination of the remainder of the proceedings, to be decided on a preliminary basis. Those questions are: 1. Whether the term pleaded at [31(b)] of the Further Amended Statement of Claim (Claim) is a term of the Lumley First Policy (defined at [27] of the Claim); 2. Whether the term pleaded at [31(c)] of the Claim is a term of the Lumley First Policy; 3. Whether the matters pleaded and particularised at [35C] of the Claim amount to a 'Claim' within the meaning of the Lumley Second Policy (defined at [27] of the Claim); and 4. If the answer to separate questions [one] and [two] [above] is 'no': ought the Lumley First Policy be rectified by the inclusion in the Proposal Form submitted to the second defendant of p 2 of the Proposal Form submitted to the first defendant for completion and, if rectified, what are the answers to questions [one] and [two]? 1. The second defendant submits that each of the questions should be answered in the negative. The third defendant submits that the answers should, in turn, be answered: yes; yes; no; and does not arise. If the last answer were to arise, the Lumley First Policy should be rectified and the answers to (one) and (two) should be "yes". 2. The plaintiffs were not privy to the contract of insurance between the first defendant and the second defendant, utilising the third defendant. Their interest in the answers to the questions relates, presumably, to the ability to ensure that there is a defendant who is capable of meeting any damages awarded to the plaintiff. 3. The plaintiffs do not expressly answer each of the questions, but its submissions are to the effect that the answers should be: yes; yes; yes; and, if it arises, yes. Principles 1. The fundamental difference between the parties is the question of whether the first two pages of the document sent by the third defendant, M&R Insurance Brokers (hereinafter "M&R") to the first defendant, IUS, forms part of the contract of insurance. The principles associated with the interpretation of a contract are well-settled. 2. In particular, those principles preclude, ordinarily, the use of parole evidence as to the subjective intention of the parties in relation to the meaning of any terms. The terms of a contract are to be construed objectively. 3. In the words of Lord Diplock, the law of contract is part of the law of obligations and, assuming that the obligations are in an appropriate form, or are made for consideration, such that the obligation will be enforced, the law of contract concerns the enforcement of those obligations. 4. Where, as here, the contract is in writing, the task of the Court in construing the terms of the contract is the determination of the intention of the parties from the written terms of their bargain. In other words, the contract is determined objectively; not subjectively; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 351; [1982] HCA 24, per Mason J (with whom Stephen and Wilson JJ agreed); Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 62; [1984] HCA 64; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179; [2004] HCA 52. 5. In Toll v Alphapharm, supra, the High Court (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) said; "This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction". 1. In circumstances where there is ambiguity, particularly in circumstances where there is a significant discrepancy or imbalance between the bargaining power of the parties to the contract, the courts have strictly applied certain conditions and, in the case of insurance contracts (and other contracts), construed a contractual term strictly against the party that drafted (or proffered) the contract. 2. The rule, however, applies only where there is an ambiguity to be resolved, in which case it is resolved in favour of the party that did not proffer the contract; Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510; [1986] HCA 82, where the Court (Mason, Wilson, Brennan, Deane and Dawson JJ) was dealing with the construction of an exclusion clause. 3. Nevertheless, a contract of insurance is not to be treated in the same way as a contract of indemnity that is uncompensated; see discussion by the Full Court of the Federal Court in Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) (2016) 129 FCR 12; [2016] FCAFC 15 at [25]-[44]. At [42], the Full Court (Allsop CJ and Gleeson J, Beach J relevantly agreeing) said; "[42] … The principles need not be restated here beyond some essential considerations, which for present purposes can be taken to be that the policy is to be given a businesslike interpretation, paying attention to the language used by the parties in its ordinary meaning, and to the commercial, and where relevant, the social purpose and object of the contract, in the context of the surrounding circumstances, including the market or commercial context in which the parties are operating, by assessing how a reasonable person in the position of the parties would have understood the language. Preference is to be given to a construction supplying a congruent operation to the various components of the whole. [43] The importance of the commercial purpose in the interpretation and construction of a policy can be seen in the cases referred to by McHugh JA (as his Honour then was) in Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 at 405. [44] To refer to 'social' purpose (where relevant) is not to detach the process of interpretation and construction from the objective enquiry as to the meaning of a document regulating the private rights of the parties. It is to identify the reality that in some circumstances a policy of insurance as a commercial document will find its place in some aspect of the organisation of society through the rights and obligations thereby created by it. That place or purpose will have its weight in the description of meaning to the words in question." 1. The principles applied to the construction of a contract, once formed, apply, with some qualification, to the formation of the contract. Assuming, for present purposes, that there was an intention in the parties to contract (i.e. form a contractually binding agreement), an objective approach is applied to determine the existence of the agreement, usually, by offer and acceptance: Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93; [1957] HCA 10; MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125; [1975] HCA 55. 2. The failure to identify an offer and an acceptance does not necessarily mean that there is no contract. A contract can be inferred from conduct of the parties. 3. Nevertheless, the rule against parole evidence does not require the Court to ignore communications between the parties in order to arrive at the objective determination of the formation of a contract and the terms of that contract. Generally, an attempt to incorporate terms from a proposal into an insurance contract will be ineffective, unless there is an express provision to that effect: Deaves v CML Fire and General Insurance Co Ltd (1979) 143 CLR 24; [1979] HCA 12, at 37 per Gibbs ACJ, at 64-65 per Mason J and at 68 and 74 per Jacobs J. In the last mentioned High Court judgment, Jacobs J said, at 68: "At least in Australia the policy itself must in some way express the incorporation of the proposal or its contents in the policy". (Reference omitted) 1. The classification of offer and acceptance does not easily apply to the communications involved in these proceedings. The Proposal Form, as earlier recited, expressly includes a statement that it does not "bind the Proposer or the Insurer to complete this Insurance". 2. As a consequence, when Lumley, or persons on its behalf, sent the Proposal Form, it was not an offer that could be accepted by the insured. Nor was it an invitation to treat, because the return of the Proposal Form, completed in accordance with the instructions, could not be accepted, thereby binding the proposer. 3. The difficulty in classifying the Proposal as either an offer or acceptance ultimately has little effect. The terms of the executed Policy of Insurance defines the term "Policy" in cl 6.13 to include the "Proposal". No party suggests that the use of the term "Proposal" is not a reference to at least some part of the Proposal Form, which contained the first two pages, some extracts of which have been recited above. The contents of the "Proposal" 1. The first aspect with which the Court will deal is whether the two typewritten pages are part of the "Proposal", as described in the Policy Wording. The second defendant submits that the "Proposal" consists only of that part of the document that is completed by the insured, the first defendant in these proceedings, IUS. In its submission, the Proposal does not include the two typewritten pages, which are the first two pages of the entire document. 2. The foregoing submission relies, at least in part, on the "Notice", being one of the headings to the first page of the document in the following terms: "Important Notice Relating to this Proposal". 3. Essentially, the second defendant submits that the use of the term "relating to" in the foregoing heading, properly construed, draws a distinction between the notice and the blank form, completed by the plaintiff, and, therefore, the first two pages of the document. They rely upon the interpretation of the term "relating to" to require a connection between one thing and another. 4. The term "relating to" has the same meaning as the term "in relation to". Generally, the term "relating to" is a term of wide import and is used to describe a relationship between one thing and another. The relationship does not need to be direct, causal or temporal, and it can be a relationship with a contemplated future event, a past event or a present circumstance. It has similar meaning, but probably not quite as wide, as the words "in connection with"; see R v Isaac; Ex parte Transport Workers' Union of Australia (1985) 159 CLR 323 at 334-335; [1985] HCA 80; Re Our Town FM Pty Limited and Newcastle Stereo Radio Pty Limited v Australian Broadcasting Tribunal and Newcastle FM Pty Limited (1987) 16 FCR 465 at 479-480; [1987] FCA 479. 5. However, the mere fact that the term "relating to" refers to a connection between one thing and another, does not require acceptance of the proposition that the two things connected are different. Further, the submission of the second defendant ignores the use of the term "this Proposal". 6. The word "this" is a word of relation that does not suggest separateness between the Proposal and the first two pages of the document. Lastly, most statutes have a reference to "this Act"; meaning the statute that contains the expression and the whole of it. Another example might be that almost every testamentary disposition commences with the term "this is the last will and testament of…". 7. Moreover, the reference to "this Proposal" is replete throughout the document, and certainly the term "this" is used throughout the first two pages of the document in reference to the Proposal or Proposal Form and not by use of the term "relating to". 8. To the extent that the document, as a whole, differentiates between that which is completed by the proposer (in this case IUS, the first defendant) and the whole of the document, it seems, on its face, that the document may, in certain parts, refer to that part of the document that requires completion as the "Proposal Form" and to the entire document as the "Proposal". 9. However, that distinction is not universal. Above the heading upon which the second defendant relies, in its submission, is the major heading of the document which, after identifying the parties issuing the document, refers to the document as "Architects Proposal Form" and on the next line "Professional Indemnity Insurance". 10. Given the heading of the document as an Architects Proposal Form, the reference to the notice "relating to this Proposal" does not signify a distinction between the first two typewritten pages of the document, which is on the letterhead of Dual Australia and Lumley, and the form that is to be completed by IUS and was completed by or on behalf of IUS. 11. Once the Court has come to the conclusion that the definition of Policy in cl 6.13 of the Professional Indemnity Insurance Contract includes the first two pages of the entire document headed "Architects Proposal Form", the issue associated with the second page that was missing in the transmission or receipt, on one of the occasions during which it was communicated, becomes much less significant. 12. Once the Proposal Form, in its entirety, is included within the definition of Policy, the accidental and unintended omission of a typewritten pro forma page of an entire document does not affect either the objectively determined intention of the parties or their subjective intention. The parties intended that the Proposal Form be part of the Policy and the Proposal Form includes all of the pages transmitted by M&R on the letterhead of Dual Australia and Lumley to the first defendant, IUS. 13. The conclusion is that the second page of the document, I hereafter referred to as the Proposal, is included as part of the Proposal and, as a consequence of the definition in clause 6.13 of the Policy Wording, part of the Insurance Policy. Construction of the Policy 1. The more difficult issue is the effect of the inclusion of the first two pages of the Proposal on the terms of the insurance. As earlier stated, the task of the Court in construing the terms of the contract is to determine the intention of the parties from the written terms of their bargain. It is the objective meaning of the entire contract and not the subjective intention of the parties that is to be determined. 2. In construing the contract, the purpose of a contract of insurance cannot be ignored. The classic definition is that a contract of insurance is a contract in which the insurer, for a monetary consideration (the premium), agrees to pay the insured a sum of money or benefit upon the occurrence of one or more specified events: Prudential Insurance Co v Inland Revenue Commissioners [1904] 2 KB 658 at 663-664. 3. Taken generally, such a definition would include a contract for payment upon the delivery of goods. Obviously, insurance is in a different class and is most often an agreement by which one party assumes a risk faced by another party in return for a premium. 4. Indeed, the event upon which money or a benefit is to be provided must be a contingency, either as to its happening or the time that it will happen. This latter aspect is, no doubt, one of the reasons the common law imposes a duty of disclosure of events that had already occurred. 5. In a contract of insurance, it is the insured that is, generally, more familiar with the risk than the insurer. Nevertheless, the purpose of an insurance contract is to ameliorate the risk of damage associated with the happening of a contingent event. 6. In order to determine the intent of the parties from the document, the Court is required to resolve apparent inconsistencies in the document. In that way, in the same way as a statute, the contract must be interpreted to have a harmonious or consistent meaning. Where there is apparent inconsistency, it is the purpose of the contract that informs the resolution of that inconsistency. 7. As made clear in the Agreed Statement of Facts (Exhibit A), Dual Australia is the agent in Australia of Lumley Insurance, and, relevantly for these proceedings, all of its acts are binding upon Lumley. The Proposal, to which earlier reference has been made, sent by M&R (the third defendant in these proceedings) is sent on the letterhead of both Dual Australia and Lumley (Lumley now being WFI Insurance Limited and the third defendant in these proceedings). M&R were, in this respect at least, acting as the agent of Dual Australia and Lumley. 8. At the time that IUS sought information as to Architects Professional Indemnity Insurance from M&R, IUS was in receipt of a Proposal from Aon Risk Services Australia Ltd (Aon). 9. On 9 February 2007, Mr O'Brien, on behalf of M&R, the third defendant, sent to IUS an Insurance Schedule for Professional Indemnity Insurance and other Insurances. The general words of introduction (Court Book p 12) refer to the Policy of Insurance being a "legal contract… subject to various conditions, one of the most important of which is the immediate notification of claims and events likely to give rise to a claim". 10. The Schedule in relation to Professional Indemnity Insurance refers to the wording of the insurance being Dual Australia/M&R Policy Wording and has effect for events from 1 January 1989, excluding known Claims and circumstances. It proposed a Policy Period from 13 March 2007 to 13 March 2008. 11. The Policy Wording includes Clause 2.1, which is in the following terms: "2.1 WE agree to indemnify the INSURED for any CLAIM for compensation first made against the INSURED and reported to US during the INSURANCE PERIOD in respect of any civil liability resulting from any breach of professional duty by the INSURED in its conduct of its PROFESSIONAL BUSINESS." 1. Further, Clause 3.15 of the Policy Wording is in the following terms: "AUTOMATIC EXTENSIONS The automatic extensions are subject to the Insuring Clauses and all other POLICY terms and conditions. We agree to provide cover in respect of any: … 3.15 Continuous Cover CLAIM where the INSURED: (a) first became aware, prior to the INSURANCE PERIOD, that a CLAIM might or could arise from facts or circumstances known to it; and (b) had not notified its insurer of such facts or circumstances prior to the INSURANCE PERIOD. The Prior Knowledge Clause 7.1(a) and (b) will not apply to any notification to US during the INSURANCE PERIOD of any such CLAIM, provided that: (i) WE were the professional liability insurer of the INSURED when the INSURED first became aware of such facts and circumstances; and (ii) WE have continued, without interruption, to be the INSURED's professional liability insurer up until this POLICY came into effect; (iii) There has not been any fraudulent non-disclosure or fraudulent misrepresentation by the INSURED in respect of such facts or circumstances; and (iv) WE have the discretion to apply either the terms and conditions of the Policy on foot when the INSURED first became aware of the facts and circumstances, including but not limited to the INDEMNITY LIMIT and DEDUCTIBLE, or the terms and conditions of this POLICY." 1. The Court has already discussed the meaning and definition of the term "Policy", which includes the Proposal. Because of the reference in cl 3.15, recited above, it is necessary to describe or recite the Prior Knowledge Clause in cll 7.1(a) and 7.1(b). Section 7 of the Policy Wording deals with exclusions and provides that the Insurer will not cover the Insured in respect of prior knowledge, being: "7.1 Prior knowledge (a) Any CLAIM arising from or in connection with a fact or circumstance that the INSURED knew or ought reasonably to have known prior to the INSURANCE PERIOD might or could give rise to a CLAIM; (b) Any CLAIM arising from or in connection with a fact or circumstance of which notice has been or reasonably should have been given under any previous Insurance." 1. Thus, the Insurance Period (Court Book p 131) was for the period 23 March 2007 to 23 March 2008 and renewed for the period from 23 March 2008 to 23 March 2009. Further, as the Schedule to the Insurance Policy makes clear, it covered any claims made from 1 January 1989, excluding known claims or circumstances. 2. However, on 27 March 2008, at 1:39 PM, Mr O'Brien informed Dual Australia that the Policy was to lapse on account of the cover no longer being required as the client, IUS, had obtained cover elsewhere (Court Book pp 122-124). It is unclear, on the documents before the Court, from where those instructions or that information came. 3. As earlier stated, the status of the documents does not neatly fit within the classification of offer and acceptance. The second defendant submits that the insurance contract was formed when Lumley decided to accept the written Proposal of IUS. That cannot be the proper interpretation of that which occurred. 4. The Proposal of IUS expressly clarifies that IUS was not bound to contract in accordance with the Proposal (including the wording of Lumley that had already been provided). Further, Lumley was not committed or required to accept the Proposal. 5. As a consequence, the document sent initially by M&R, on behalf of Lumley, to IUS was not an invitation to treat, giving rise to an offer from IUS. If the return communication from IUS were an offer, then acceptance of the offer would have created a contract. Expressly, Lumley did not have the ability to bind IUS to the Proposal completed by IUS to M&R. 6. Rather, the Proposal submitted by IUS was an invitation to treat, which excited from Lumley an offer, including the premium amounts, which offer was accepted by IUS. It was that latter offer and acceptance that formed the contract. 7. The Policy, as defined in the Policy Wording, included the Proposal. 8. The second defendant essentially submits that priority should be given to the provisions of cl 1.1 (that Insurance Cover is provided for the Insurance Period) and cl 2.1, which is recited above. However, such priority ignores the express extension to which reference has been made. It also ignores the terms of the Proposal, which expressly, states that it forms part of the Policy. 9. The Proposal also includes, expressly, a recital of the provisions of s 40(3) of the Insurance Contracts Act 1984 (Cth). Further, the Proposal, in its second page, under the heading "Notice of Occurrences or Events" states: "If during the period of this policy, the Insured shall become aware of any occurrence which may given rise to a Claim under the policy and shall during the period of this insurance give written notice to the Insurer of such occurrence, any Claim which may be subsequently made arising out of the occurrence of which notification has been given shall be deemed to be a Claim made during the period of this policy whenever such Claim may actually be made." 1. The foregoing notice, in slightly less technical terms, has the same effect as the provisions of cl 3.15 of the Policy Wording. 2. It is necessary to set out some background facts that are relatively uncontroversial. 3. In November 2006, the plaintiffs informed IUS that they wish to obtain approval to construct two residences on a property they owned. IUS performed architectural work for that purpose. Apparently, on or about 23 April 2007, the relevant development control plans altered, such that the plaintiffs were no longer entitled to develop two residences on that property. While irrelevant for present purposes, the development control plans altered again to allow such a development. 4. The plaintiffs' Further Amended Statement of Claim alleges that on or about 23 April 2007, IUS became aware of circumstances that gave rise to a claim by the plaintiffs. This was during the period of insurance between 23 March 2007 and 23 March 2008 (see [35B] of the Further Amended Statement of Claim). 5. Further, in the week following 29 July 2008, IUS was notified of the plaintiffs' claim. The plaintiffs allege that the last-mentioned notification occurred in the second Policy Period of Insurance, namely, between 23 March 2008 and 23 March 2009 ([35C] of the Further Amended Statement of Claim). Lastly, the plaintiffs' claim that, in or about early 2014, IUS notified Lumley through Dual Australia of the plaintiffs' claim. 6. The foregoing is sufficient background of the factual allegation to understand the import of the separate questions that have been asked. The Court is not required to determine whether the allegations to which reference has been made in the Further Amended Statement of Claim are proved or are accurate. It is sufficient for present purposes to recite the claim. 7. Further, the Court, in answering the preliminary questions, is not determining whether a contract of insurance was in place for any particular period or whether facts were known at a particular time or a claim was made at a particular time. Rather, the Court is answering the questions proposed, bearing in mind the factual allegations in the Further Amended Statement of Claim and the evidence of the documents and their communication to others. 8. I turn then to the questions and to the Court's answers to them. The First Question 1. The first question poses the question as to whether that which is pleaded at [31(b)] of the Further Amended Statement of Claim as a term of the Lumley First Policy (defined at [27] of the Further Amended Statement of Claim). The terms of [31(b)] are as follows: "(b) Any circumstances of which IUS became aware during the period of insurance, 23 March 2007 to 23 March 2008 which could give rise to a future claim provided IUS informed Dual Australia Pty Ltd and/or Lumley in writing of such circumstances within the period of insurance (Insurance Schedule prepared for IUS by M&R Insurance Brokers, February 2007; Insurance Schedule prepared for IUS by M&R Insurance Brokers, March 2007; invoice issued by M&R Insurance Brokers 27227 dated 23 March 2007)." 1. As can be seen from the foregoing, the plaintiffs' claim that the contract of insurance, operative between 23 March 2007 and 23 March 2008, indemnified damage (up to the limitation set otherwise in the contract) in the following circumstances: 1. Where IUS became aware, during the period of insurance, of circumstances that could give rise to a future claim; 2. If IUS informed Dual Australia and/or Lumley, in writing, of such circumstances within the period of insurance. 1. The terms of the Proposal under the heading "Notice of Occurrences or Events" is set out above. It provides that the insurer indemnifies the insured for any claim, subsequently made, if the insured becomes aware of any occurrence which may give rise to a claim and gives written notice to the insurer during the period of insurance of that occurrence. 2. The reading of [31(b)] and the Proposal discloses that [31(b)] accords, precisely, with the notice in the Proposal, to which the Court has referred. Further, from the recitation of the automatic extensions in the Policy Wording earlier in these reasons, it can be seen that the provisions of cl 3.15 of the Policy Wording extends the coverage for the Insurance Period to a claim where the insured first became aware, prior to the Insurance Period, that a claim might or could arise from facts or circumstances known to it and had not notified its insurer of such facts or circumstances prior to the Insurance Period. 3. However, in the case of the operation of cl 3.15, the extended coverage applies only where Lumley (or the relevant insurer) was the professional liability insurer at the time that the insured first became aware of such facts and circumstances; that Lumley had continued, without interruption, to be the insured's professional liability insurer up until the Policy came into effect; there is an absence of fraud by the insured; and, in those circumstances, there is a discretion in Lumley to apply the terms of the Policy applicable when the facts became known. 4. If, as is alleged in the Further Amended Statement of Claim, IUS became aware of the facts that gave rise to the possibility or probability of a Claim and notified M&R or Lumley at a time when the Policy applied (or, assuming continuity, had been renewed) then, with one qualification, the Insurance Policy required the Policy to indemnify IUS for the damage up to its liability. 5. The subjection, to which there is reference in the immediately preceding paragraph, relates to the absence of knowledge of the circumstances, or awareness of the circumstances, prior to a time when Lumley was the insurer of IUS. That subjection, however, is accommodated in [31(b)] by the reference to IUS becoming aware "during the period of insurance, 23 March 2007 to 23 March 2008". 6. As a consequence of the foregoing, there is no inconsistency between the Policy Wording and the Notice of Occurrences or Events and, therefore, the issue of whether p 2 of the Proposal document, or pages one and two of the Proposal document, forms part of the Policy makes no relevant difference to the answer to the question posed. The answer to the first question is in the affirmative. The Second Question 1. The second question requires the Court to answer whether that pleaded in [31(c)] of the Further Amended Statement of Claim is a term of the Lumley First Policy. The terms of [31(c)] of the Further Amended Statement of Claim are as follows: "31 Pursuant to contract made on or about 23 March 2000 M&R Insurance Brokers promised to provide IUS with professional indemnity claims made or discovered insurance cover including for: … (c) Any Claim whenever actually made subsequently to the period of insurance 23 March 2007 to 23 March 2008 which claim would be deemed to be a Claim made during the period of insurance if IUS … became aware of the occurrence which might give rise to a Claim and gave written notice to … Lumley within the period of insurance". 1. The Insurance Cover that is claimed exists, by virtue of [31(c)] of the Further Amended Statement of Claim, posits cover in the following circumstances: 1. A claim made subsequent to the period of insurance between 23 March 2007 and 23 March 2008 would be deemed to be a claim within the period of insurance, in the following circumstances: 2. IUS became aware of the occurrence giving rise to a claim within the period of insurance; and 3. IUS gave written notice to Dual Australia and/or Lumley within the period of insurance. 1. Again, the second page of the Proposal under the heading "Notice of Occurrences or Events", the terms of which are recited above, provides that if the insured, IUS, becomes aware of an occurrence that may give rise to a claim under the Policy and gives written notice to Dual Australia or Lumley of such occurrence, any claims subsequently made, arising out of the occurrence, shall be deemed to be a claim made during the period of the policy, whenever such claim is actually made. This accords with the claim in [31(c)] of the Further Amended Statement of Claim. 2. Clause 3.15 of the Policy Wording needs to be recited again. It is, relevantly, in the following terms: "3.15 Continuous Cover CLAIM where the INSURED: (a) first became aware, prior to the INSURANCE PERIOD, that a CLAIM might or could arise from facts or circumstances known to it; and (b) had not notified its insurer of such facts or circumstances prior to the INSURANCE PERIOD." 1. Clause 3.15 of the Policy Wording must be read together with section 2 of the Policy Wording and, on account of the finding already made about the status of the Proposal, with the Proposal. Section 2 is the Insuring Clause and asserts that: "[Lumley and/or Dual] agree to indemnify the INSURED for any CLAIM for compensation first made against the INSURED and reported to US during the INSURANCE PERIOD in respect of any civil liability resulting from any breach of professional duty by the INSURED in its conduct of its PROFESSIONAL BUSINESS." 1. The provisions of section 2, relevantly, also confirmed that the Policy provides cover for breaches of professional duty committed after the retroactive date, i.e. 1 January 1989. There are a number of difficulties with the terms of cl 3.15. 2. First, it applies to a claim in circumstances where the insured, IUS, became aware that a Claim might be made or could arise from facts or circumstances known to it, prior to the Insurance Period. As a consequence, if the Insurance Period of which the plaintiffs' speak in [31(c)] of the Further Amended Statement of Claim is the period 2007-2008, the facts did not become known prior to the Insurance Period. As a consequence, cl 3.15 of the Policy Wording does not extend to such a claim. 3. If, on the other hand, there was a period of insurance from 2008 to 2009 (or any part thereof) during which IUS became aware of the possibility or probability of a claim or facts, it would give rise to cover for a Claim prior to that subsequent Insurance Period. Further, if it be that latter period to which [31(c)] refers, then IUS became aware of the claim or facts prior to the Insurance Period and had not notified Lumley and or Dual Australia of the circumstances, prior to the Insurance Period. The Insurance Period, in this latter example, would be the period after 23 March 2008. 4. Further, the prior knowledge exceptions, in cll 7.1(a) and 7.1(b), may not apply to the circumstances alleged in the Further Amended Statement of Claim because: Lumley/Dual Australia were the Insurer at the time that IUS first became aware of the facts and circumstances giving rise to the claim; and there has been no fraudulent nondisclosure or misrepresentation. But, the Court has a need to construe the terms of cl 3.15(ii). 5. The difficulty with the construction of cl 3.15(ii) is the meaning of the term "up until this policy came into effect". Here, there may be an inconsistency between one construction of cl 3.15(ii) and the "Notice of Occurrences or Events" in the Proposal. 6. In the circumstances, it seems appropriate, given the need for consistency and the application of a commercial approach to the contract, that the term "up until this Policy came into effect" applies to the period of insurance when the circumstances were notified, during a continuous period of insurance. Thus, the relevant Policy comes into effect immediately prior to the notification of the circumstances that could give rise to the claim. 7. In other words, if, as is alleged in the Further Amended Statement of Claim, Lumley/Dual Australia were notified of the circumstances during a contiguous period of insurance, the circumstances of a claim alleged in [31(c)] of the Further Amended Statement of Claim would be applicable under the Policy. 8. The cover, for which the plaintiffs' claim in [31(c)] of the Further Amended Statement of Claim, refers to the circumstance that written notice was given to Dual Australia and/or Lumley "within the period of insurance". 9. The use of the definite article relating to "the period of insurance" may give rise to the interpretation that the circumstances may have to be notified during the period of insurance between 23 March 2007 and 23 March 2008. 10. In my view, [31(c)] should not be read in that way and the latter use of the definite article in the term "within the period of insurance" refers to within any period of continuous insurance commencing on 23 March 2007. In that way, notice given during a period of insurance between 23 March 2008 and 23 March 2009 is caught within the allegation of coverage contained in [31(c)] of the Further Amended Statement of Claim. 11. On the basis of the foregoing, there is no discrepancy between the Proposal Document and the terms of [31(c)] of the Further Amended Statement of Claim. Further, the term is a term of the Lumley First Policy and the answer to the second question posed is, again, in the affirmative. Again, that affirmative answer depends upon the period of insurance outlined in the foregoing reasons and the absence of knowledge of the circumstances prior to the entry into the insurance agreement on or about 23 March 2007. The Third Question 1. The third question requires the Court to resolve the controversy between the parties as to whether the notification by the plaintiffs to Mr Ius during the week of 29 July 2008 was a "Claim" within the meaning of the Policy said to be in existence between 23 March 2008 and 23 March 2009 (hereinafter "the Lumley Second Policy"), being the Policy in place between 23 March 2008 and 23 March 2009 (hereinafter "the Lumley Second Policy Period of Insurance") and subsequent to the Lumley First Policy, being the Policy entered into during the period 23 March 2007 to 23 March 2008 (in these reasons referred to as "the Lumley First Policy"). 2. It is necessary to look at the definition of "Claim" and the clauses that refer to that which amounts to a "Claim" within the terms of the policy as it existed, in so far as it covered the first defendant's liability. 3. Clause 6.1 of the Policy Wording provides that, in the Policy, "Claim means any civil proceeding brought by a third party against the Insured for compensation". The Insuring Clause, section 2 of the Policy Wording, provides that Lumley/Dual Australia agrees "to indemnify the insured for any claim for compensation first made against the Insured and reported to [Lumley/Dual Australia] during the Insurance Period in respect of any civil liability resulting from any breach of professional duty by the Insured in its conduct of its Professional Business". 4. The agreement to compensate covers breaches of professional duty after the retroactive date, to which earlier reference has been made, but for present purposes that aspect is irrelevant. 5. As earlier stated, the separate questions that the Court is required to answer do not include whether, at the time that the circumstances were notified to Lumley/Dual Australia, there was, in place, an Insurance Policy, which had effect. Nor do the questions relate to the effect, if any, of the provisions of s 40(3) of the Insurance Contracts Act 1984 (Cth), to which p 1 of the Proposal refers. The Court is confined, in answering this question, to the terms of the Policy itself. 6. Dealing with the Policy Wording and the Policy itself and ignoring for present purposes the effect of the Insurance Contracts Act, a claim is confined to civil proceedings. The Further Amended Statement of Claim in [35C] refers to a notification on 29 July 2008 of the "claim" of the plaintiff, which "claim" was made in a telephone conversation. The terms of [35C] do not refer to the commencement of civil proceedings and, as a consequence, the telephone notification by the plaintiffs to Mr Ius was not a "Claim" within the meaning of the Lumley Second Policy. Nor, it should be noted, is it a "Claim" within the Lumley First Policy. Fourth Question 1. On the view the Court has taken of the answers to the first and second question, the fourth question does not arise. Nevertheless, the answer to neither the first nor the second question is absolute. Each answer is to be qualified. 2. Further, the Court, as presently constituted, ought to deal with the fourth question on the basis of the possibility that it requires answering in any circumstances where the answers to the first and second question are not absolute. The fourth question raises whether the contract of insurance ought to be rectified by the inclusion in the Lumley First Policy of the second page of the Proposal said not to have been transmitted during the course of the communication between IUS and/or M&R to Dual/Lumley. In some respects, this question presumes that the first page of the Proposal is included in the Lumley First Policy. 3. As a matter of practicality, generally, where documents are known to each party to a contract and one party accepts an offer and communicates that acceptance by, for example, transmitting only the signed page of a contract, the fact, if it be the fact, that there are other pages not transmitted, does not affect the acceptance. The conclusion depends on the intention of the contracting parties. 4. As earlier indicated, there can be little doubt that the intention of each of the contracting parties, objectively determined, was that the proposal drafted and initiated by M&R on behalf of themselves, Dual Australia and Lumley and the whole of the document was the Proposal, or the Proposal Form and, in accordance with the express terms of the Contract, relevantly the Policy Wording, formed part of the Policy. 5. As a consequence of the foregoing, rectification, as such, does not strictly arise. Nevertheless, as earlier stated, the Court will deal with the issue. In doing so, it is necessary to reiterate and/or state some of the salient facts. 6. The Architects Proposal Form, as earlier stated, is on the letterhead of M&R and includes, on its letterhead, a reference to both Dual Australia and Lumley each of the logos of which are on each page. As earlier stated, in these proceedings, there is no distinction between the issues as they affect Lumley and as they affect Dual Australia, which was the Australian subsidiary of Lumley. 7. That Proposal Form was sent by M&R to the first defendant, IUS, on 9 February 2007. The Proposal Form was completed and returned, by Mr Ius, to M&R, but, in returning the document, p 2 of the Proposal Form was not returned. This was apparently due to an oversight by Mr Ius and/or his staff to the evidence of which the Court has already referred. I draw that inference. 8. Plainly, at that time, M&R, Dual Australia and/or Lumley intended the whole of the Proposal Form to be sent to Mr Ius and form the basis upon which Mr Ius would complete the Proposal Form and return it. Indeed, as stated, the whole of the Proposal Form was sent to Mr Ius. 9. The completion and return of the Proposal Form, even with the omission of p 2 of the Form, does not detract from the intention of M&R, Lumley and/or Dual Australia. Nor does it detract from the intention of Mr Ius. 10. The material that was sent, seemingly, from M&R to Lumley did not include any part of the Proposal Form, but, rather, attached a pro forma Proposal Form and a worksheet, containing the information that might otherwise have been completed by Mr Ius. To that information, Lumley responded by email, on the same day, accepting or agreeing to provide insurance as per "your worksheet". 11. From the foregoing, it is clear that, from the perspective of Lumley and/or Dual Australia, the precise terms of the Proposal did not need to be sent to either or both of them. Nevertheless, they sent the Proposal to IUS; requested that the Proposal be completed; and, on the basis of the completion of that process, agreed to provide the insurance. 12. I conclude that objectively determined, it was the clear intention of IUS, Lumley, Dual Australia and/or M&R that p 2 of the "Architects Proposal Form" formed part of the Proposal and, therefore, part of the Contract of Insurance. As well as the reasons already recited, it is also clear that there was no intention on the part of IUS, nor, it would seem, an ability on the part of IUS, to negotiate the Contract of Insurance on terms that were different from those submitted by Lumley and/or Dual Australia to M&R and from them to Mr Ius. 13. Further, Lumley and/or Dual Australia did not take into account, when accepting the Insurance Proposal, that p 2 of the Proposal was missing in the email from IUS to M&R. Nor did M&R. Further again, M&R did not refer to the missing p 2, when communicating with Lumley and/or Dual. 14. It is unnecessary to rely upon the rule of construction summarised by the maximum verba chartarum fortius accipiuntur contra proferentem [the words of an instrument should be taken most strongly against the party preferring them], but the rule summarised in the maxim gives comfort to the foregoing interpretation: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at 529; [2005] HCA 17. The Principles on Rectification 1. As is obvious from the foregoing, the Court has taken the view that the Lumley First Policy already includes p 2 of the Proposal. As has also been made clear, the Court will deal, to the extent possible, with the question of whether the Lumley First Policy should be rectified if, contrary to its finding, the Court were satisfied that p 2 of the Proposal did not form part of the documentation that forms the Contract. 2. It is fundamental to the principles of rectification to which this question relates, that it is the document that is rectified; not the contract Pukallus v Cameron (1982) 180 CLR 447 at 452; [1982] HCA 63, per Wilson J (with whom Gibbs CJ and Murphy J agreed). It is not for the Court to make the Contract for the parties, but equity will eliminate a mistake, at least one that is common. It is unnecessary to deal with unilateral errors. The effect of the rectification is that the document is read as if it had always been in the form that is the result of the order of the Court rectifying the document. 3. As is explained by the High Court in Pukallus, rectification can occur where there is a continuing common intention that can be inferred in which the common intention of the parties requires the contract to be in the form as rectified. The Court does not here suggest that common intention is always necessary, but, for present purposes, it is sufficient. Ultimately the common intention must be as to the content of the instrument. 4. Here, as already stated, the document was proffered by M&R and Dual Australia/Lumley in a particular form, which form was adopted by Mr Ius. The return transmission from Mr Ius to the parties, who had proffered the document, which mistakenly omitted p 2 of the document, necessarily informs the objective assessment of the mutual intention of all of the parties. 5. Thus, the fact that the parties do not share a subjective view that the Proposal, and in particular the first two pages thereof, form part of the Policy, does not affect the common intention associated with that which was intended to be the contents of the document initially transmitted, and one page of which was not retransmitted. In this case, the objective intention of the parties is identical to the subjective intention of the parties. 6. In dealing with the principles, Wilson J, in Pukallus, said: "The second principle governing the rectification of a contract which is material to this case is that which requires the plaintiff to advance 'convincing proof' that the written contract does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in clear and precise terms. The Court must not assume for itself the task of making the contract for the parties. … … In the first place, the term which it is sought to include in the contract is clearly inconsistent with the expressed description of the land to be sold. His Honour's statement that 'the parties had not determined exactly how far south of the cultivation the boundary would go' suggests that the parties were prepared to engage if necessary in a further subdivision of that part of Portion 1154 which lay outside subdivision 1." (Pukallus, supra, at CLR 180, authorities omitted.) 1. In Pukallus, the Court refused to rectify the contract for the sale of land. In Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407, the Court of Appeal (Allsop P, as his Honour then was, Giles and Campbell JJA) discussed the modern application of the principles of equity. In the judgment of Campbell JA, his Honour said: "[446] The remedy that is granted is, as with all equity's remedies, one that will seek to undo, so far as is in practice possible, the departure, that the litigation has shown to exist, from equity's standards of conscientious behaviour. The way this is achieved, when a remedy of rectification is granted, is by rewriting the contract so that it no longer departs from the common intention of the parties. The rewriting is done in a quite literal sense – the proper form of order identifies the precise words of the contract that are to be struck out, the precise words that are to be inserted, and where those words are to be inserted. … As well the order usually (but not always …) involves calling in the original document and actually endorsing the order on the instrument that is to be rectified …. In that way the executed contractual document is no longer able to be a potential source of error and confusion, by appearing to state legal relations that in truth are not as the document says. [447] That this is the type of remedy that is granted has an effect on the sort of 'common intention' that is relevant for rectification. The common intention of the parties has to relate to what the mutual rights and obligations of the parties will be, and has to be sufficiently well-defined and clear to be able to be stated in words that can be incorporated in a contract. [448] The rewriting should not do anything more than rewrite the contract to the minimum extent that is necessary for it to no longer fail to express the common subjective intention the parties had when the contract was entered. Thus, to the extent that the words of the contract cover some situation concerning which the parties had no common subjective intention, the words of the contract continue to govern that situation." 1. The Court, as presently constituted, applies the foregoing principles. Clear proof must be forthcoming of the mistake and its precise terms. There can be no doubt, on the evidence before the Court, that the parties intended p 2 of the Proposal to form part of the document and, therefore, by express inclusion in the Policy Wording, part of the Contract for Insurance that has been referred to as the First Lumley Policy. 2. In those circumstances, while on one view of the answers given to the first two questions may require the answer that the fourth question does not arise, the Court makes clear that, if its answer to those questions is incorrect, the Lumley First Policy should be rectified by the inclusion in the Proposal Form, submitted by the first defendant to the second defendant, of p 2 of the Proposal Form, and, if rectified, the Court would answer the first two questions in the same way as they have been answered, otherwise. Conclusion 1. For the foregoing reasons, the Court makes the following orders: 1. The answers to the questions posed for separate determination pursuant to the terms of Uniform Civil Procedure Rules 2005 (NSW) r 28.2 are as follows: 1. First Question: Whether the term pleaded at [31(b)] of the Further Amended Statement of Claim is a term of the Lumley First Policy (defined at [27] of the Further Amended Statement of Claim)? 2. Answer: Yes, provided that the claim does not arise from or in connection with facts or circumstances that IUS knew or ought reasonably to have known prior to the Insurance Period might or could give rise to a claim; 3. Second Question: Whether the term pleaded at [31(c)] of the Further Amended Statement of Claim is a term of the Lumley First Policy? 4. Answer: Yes, again provided that the claim does not arise from or in connection with facts or circumstances that IUS knew or ought reasonably to have known prior to the Insurance Period might or could give rise to a claim and further provided that there was in place a relevant contract of insurance from 23 March 2008 until notification to IUS in the week following 29 July 2008; 5. Third Question: Whether the matters pleaded and particularised at [35C] of the Further Amended Statement of Claim amount to a "Claim" within the meaning of the Lumley Second Policy (defined at [27] of the Further Amended Statement of Claim)? 6. Answer: No; 7. Fourth Question: If the answer to separate questions (a) and (b) is "no": ought the Lumley First Policy be rectified by the inclusion of the Proposal Form submitted to the second defendant of p 2 of the Proposal Form submitted to the first defendant for completion and, if rectified what are the answers to questions (a) and (b)? 8. Answer: The question does not strictly arise. On one view of this question, it is a hypothetical, which is answered in the following way: if the second page of the Proposal Form is not otherwise part of the Proposal and, as a consequence, not part of the Lumley First Policy, then the documents, being the Lumley First Policy and the Proposal Form submitted will be rectified by the inclusion of p 2 of the Proposal. If so rectified, the answers to questions posed at (a) and (b) are answered in exactly the same terms as the answer to the first question and the second question above in this Order. 1. The Court will hear the parties on costs and reserves costs pending any application in accordance with directions to be given. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 April 2019