Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788

[2022] HCATrans 127

[2022] HCATrans 127

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S42 of 2022

B e t w e e n -

ALLIANZ AUSTRALIA INSURANCE LIMITED

Appellant

and

DELOR VUE APARTMENTS CTS 39788

Respondent

KIEFEL CJ
GAGELER J
EDELMAN J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION

ON THURSDAY, 11 AUGUST 2022, AT 9.45 AM

(Continued from 10/8/22)

Copyright in the High Court of Australia

KIEFEL CJ:   Yes, Mr Jackman.

MR JACKMAN:   Can I turn next to the topic of estoppel, and ask your Honours to go to the core appeal book?  Relevantly, at page 98, there is a passage extracted from the Delaforce case in the New South Wales Court ‑ ‑ ‑

KIEFEL CJ:   Mr Jackman, I think Justice Gleeson ‑ ‑ ‑

MR JACKMAN:   I am so sorry.

GLEESON J:   I am sorry, Mr Jackman.  Just before you do get into estoppel, I had one more question which you perhaps might take on notice in relation to the main passage in Craine.  It refers to the exercise in adversum of correlative rights.  I was just wanting to query the meaning of “in adversum” in that context.  I think it probably means without consent.

MR JACKMAN:   Your Honour is testing me now.  Can I just try and identify the passage in ‑ ‑ ‑

GLEESON J:   Yes, it is at the top of page 384 in the bundle.

MR JACKMAN:   Without consent would be, we would say, an appropriate translation of that.

GLEESON J:   Thank you.

MR JACKMAN:   Or, at least, without express consent.  Yes.

KIEFEL CJ:   While you are interrupted, Mr Jackman, have you said all that you intend to say about the prospect of there being another category of waiver that is neither election, nor estoppel?  That, you might recall, was taken up with your opponent.

MR JACKMAN:   Yes.  Relevantly to this case, the question depends on how one treats Craine.  This Court, in Gardiner, appeared to be inclined to treat Craine as a case of election.  But, as I submitted yesterday, you can only treat it as a case of election if the principle of election is based upon inconsistent positions or courses of action, rather than a strict insistence on a choice between inconsistent rights.

If one takes that approach, then this case falls within that broader concept of election.  On the other hand, if one adopts my learned friend’s argument, which is that election is strictly confined to a case where the party must choose between two mutually exclusive inconsistent rights, then that cannot explain Craine, and one then needs to treat Craine as an illustration of a principle of waiver which is neither election nor estoppel.

EDELMAN J:   There is a third possibility that I think I touched on with you yesterday, which is that Justice Isaacs was working upon a model that was perhaps the dominant model at that time, which is that obligations themselves were contingent or conditional upon the performance of a counter‑obligation, sometimes described as a condition.  So, rather than the breach of the condition leading to the rise of a right or a power to terminate a contract or to elect to terminate a contract, there was automatic discharge of a counter‑promissory obligation.  That model may not have survived much longer after the decision in Craine.

MR JACKMAN:   In our respectful submission, what Justice Isaacs was saying was purely, that as a matter of the construction of clause 11, it has a self‑executing operation on its own construction because it ‑ ‑ ‑

EDELMAN J:   Precisely.

MR JACKMAN:   Yes.  It is not a question of the general law of termination of contracts.  It is not a question of the general law of how contractual conditions operate and whether there must be a counter condition by the other party.  It is simply a question of construction of clause 11, which would be equally applicable today as it was in 1920.

We say, on that basis, as a matter of formal linguistic expression, clause 11 in that case is directly comparable to section 28(3) in ours, but we go on to say our case is stronger because, in the real world, section 28(3) does require a decision to be taken by the insurer, whereas clause 11 in that case would operate if the insurer simply sat on its hands and did nothing.

GLEESON J:   Does that analysis explain why Chief Justice Allsop identified Craine under the rubric of waiver rather than election?

MR JACKMAN:   Yes.  His Honour had to do so, given that his Honour had adopted that very narrow view of election as depending on inconsistent rights.  If one takes that approach, then one has to treat Craine as an illustration of an independent doctrine of waiver which is apart from election or estoppel.  To be fair to the learned Chief Justice below, Craine is expressed in terms of waiver ‑ ‑ ‑

GLEESON J:   Election?

MR JACKMAN:   Well, waiver.

GLEESON J:   Waiver.

MR JACKMAN:   Justice Isaacs uses the language of waiver, and as I say, one can only treat it as an illustration of election if one takes a broad view of election.

I should add, as well, in answer to your Honour the Chief Justice’s question, that the High Court in Gardiner is not absolutely dogmatic about there being no independent doctrine of waiver.  The High Court does make the point that there has been some linguistic misuse in a lot of cases, but the High Court does not rule out the existence of independent principles of waiver apart from election, estoppel or abandonment, and insists that the circumstances of the particular case be attended to, in order to assess whether what might have been treated as waiver would have been more accurately – and usefully – expressed as a case of election, estoppel or abandonment.  So, the door is open the Court’s reasoning in Gardiner to the existence of an independent doctrine of waiver.

EDELMAN J:   Can I just very briefly just test the breadth of that proposition?  If you say Justice Isaacs is not to be confined in his reasoning to a notion of conditions, precedent or construction to give rise to a conditioned precedent, if one party breaches an ordinary warranty of a contract and the other party says, you have breached that ordinary warranty but I am not going to seek damages, can a week later, with nothing else having happened in the meantime, the other party say, I am going to seek damages now?

MR JACKMAN:   On the assumption that absolutely nothing has occurred, it is difficult to see how that decision would bind the party that has said, I am not going to seek damages.

EDELMAN J:   Why, on your view, is that not an election?

MR JACKMAN:   Because nothing has actually been done in – first of all, we can identify that there is not a choice between inconsistent rights.  We can rule that out because there is not a right of termination on your Honour’s hypothesis.  Nor are there inconsistent positions or courses of action, because the only thing that has been said is, we do not intend to seek damages, and then there is a change of mind.  It would be different if other events had intervened.

If, as a result of that decision not to seek damages, some other provision of the contract was triggered and was exercised, then that – on Craine reasoning – would constitute a binding decision.  Whether you call it waiver or election does not matter, because that is the adoption of inconsistent courses of action, or the actual exercise of rights, which are then inconsistent with the resiling from that decision.  That is what we have in the present case, because we have – in several different ways – the actual exercise of rights which are triggered only if the claim is accepted.  It is that course of conduct or that position which is inconsistent with the decision to resile from the May 17 email and to assert an operative non‑disclosure.

GAGELER J:   Mr Jackman – this is perhaps just following up a question you were asked by Justice Gleeson at the outset – at page 320 in Craine, in using the language that you were asked about, Justice Isaacs makes reference to the:

Scotch law “approbate and reprobate”.

I note that in Verwayen, 170 CLR 394, in particular at page 421, Justice Brennan refers to a “doctrine of approbation and reprobation”, which he says is:

closely related to election, and sometimes treated as a species of election –

Are you able to elaborate the doctrine?

MR JACKMAN:   The central idea in approbation and reprobation is inconsistent conduct, which we say is at the heart of election.  If one treats election as broadly encompassing inconsistent positions or inconsistent courses of action, then that would not leave room for an independent doctrine of approbation and reprobation.  But, again, if one takes a narrow view of election, then approbation and reprobation is a way of expressing an independent principle of waiver, which would explain cases such as Craine if they cannot be explained as election cases in the narrow sense.  So, when Justice Isaacs is picking that concept in Craine, we would submit what his Honour is referring to is a binding waiver arising from conduct inconsistent with the assertion of a different position, and that can be treated either as waiver or as an instance of the broad view of election.

If I can move, then, on to estoppel and go to page 98 of the core appeal book, the extract from Delaforce.  Relevantly, at the top of page 99, is the critical paragraph 5 in the Delaforce reasoning, which this Court expressly approved in AFSL v Hills.  Dealing with that paragraph, his Honour begins by referring to:

The importance of keeping a party to a representation or encouragement previously made is all the stronger where, as here, the encouragement or representation has been relied upon by a party to abandon a course of conduct that could possibly –

It is the language of possibility:

have led to a different outcome.  This can be described in the language of loss of a chance that is not fanciful or unrealistic, or in the language of proceeding thereafter on the basis of a new or changed convention or conventional basis.

His Honour then refers to Grundt, just as this Court did in AFSL v Hills.  Then:

For instance, if, as here, in reliance upon a representation or encouragement, a court case is abandoned and the representation or encouragement is later sought to be resiled from, the party to whom the representation or encouragement was made and in whom the expectation was raised is left in the position not only of the loss of the entitlement to pursue his or her rights in the case in the past, but also is likely to be in the position of being unable to demonstrate what would, or even may, have happened in the case, it being an alternative, complex and now hypothetical body of human conduct.

Just interpolating there, his Honour, there, is referring to difficulties of proof because of the course of conduct which has been adopted.  Difficulties of proof are well‑recognised as detrimental or prejudicial in cognate equitable principles such as laches, where they are typically the foundation for the defence of laches.  So, his Honour is referring to a well‑recognised head of detriment.  Then his Honour goes on to say:

That the party encouraged cannot show that he or she would –

That is the language of probability, as distinct from “could possibly”:

have been better off in the posited alternative reality is not fatal to the making out of the estoppel.  Indeed, the inability to prove such things reveals a central aspect of the detriment:  being left, now, in that position.  Of course, if it is self‑evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here.

Just picking up the question that your Honour Justice Steward, asked yesterday, echoing that language of “doomed to fail”.  If your Honours go back to paragraph 311, your Honours will see, towards the end of that paragraph, the Chief Justice’s view of the section 28(3) case here.  Of course, ultimately, the Chief Justice said that the 28(3) case was established, but his Honour says – half‑a‑dozen lines from the end of paragraph 311:

The position here was one of an arguable (but not demonstrably clear) invocation of rights arising from ss 21 and 28.  The insurer is not to be seen as giving up a right, but as to be representing that it will not run an arguable defence to a claim –

We respectfully adopt that reasoning in relation to the estoppel case.  That is, it cannot be said – and the very judge who had to decide the 28(3) case was of that view, that it was not a matter that was demonstrably clear, or perhaps absolutely certain.  We deploy that reasoning in relation to the Delaforce approach by saying that case challenging the invocation of 28(3) was not doomed to fail.

We do take issue with the way that the Chief Justice deploys the arguability rather than absolutely certain nature of the right in paragraph 311 because, in our submission, whether the doctrine of election applies cannot depend on whether the right is absolutely certain.  Indeed, the typical case would be one of a degree of contestability and it is hard to find election cases where the right was absolutely certain.  Indeed, most of the cases have involved highly contestable litigation.

STEWARD J:   But is not one possible the fact that you never lost your right to sue and you are exercising it very well today, whereas in Delaforce the wife did lose her chance in the Family Court?

MR JACKMAN:   That is a difference, but I will come to the Full Court’s reasoning in a moment, in which the Full Court indicates that what was lost was the right to – or the opportunity to sue at an early stage, given that the majority of cases ‑ ‑ ‑

STEWARD J:   What did you lose by, say, 12 months of delay?  You are protected by interest, are you not, in the event of a judgment debt?

MR JACKMAN:   Yes, but as the Full Court points out, most cases settle, and cases tend to settle when the parties are on relatively good terms.  What had happened after 12 months was a souring of the relationship which made a compromise of that case beyond the ability of the parties, hence the litigation which went to trial.

STEWARD J:   Do we have a finding about souring?

MR JACKMAN:   Yes.  Chief Justice Allsop does make a finding to that effect, which I will just have ‑ ‑ ‑

STEWARD J:   When you get a moment.

MR JACKMAN:   ‑ ‑ ‑ looked up, if I may.

STEWARD J:   Thank you.

MR JACKMAN:   That is why the Full Court says it is impossible to tell how litigation brought at an early stage in that 12‑month period would have unfolded.  I will return in a moment to the proposition that it is not fatal if we cannot show that we would have been better off in the posited alternative reality because your Honour Justice Edelman put a question yesterday to me, which I promised to return to, concerning the need to show that the opportunity is a beneficial one.  In loss of a chance, or loss of opportunity reasoning, yes, we do need to show that the opportunity could have been beneficial, but we do not need to show that it would have been beneficial as a matter of probability, and we do not need to show that that possibility of benefit can be measurable in dollar terms.  That is a point taken up in AFSL v Hills which I will come to in a moment.

But if one goes back to paragraph 333, his Honour focusses on the prejudice that was asserted as being real involving the passage of 12 months in which Delor Vue could have taken its own fate in its own hands and acted for itself in rectifying the property to the extent it was financially able to do so, and in suing the insurer, how that all would have played out is impossible to tell.  It is impossible because the parties conducted themselves on an entirely different basis.

Before I go to the Full Court, can I take your Honours to AFSL v Hills, which is in volume 2 of the joint book of authorities, relevantly at page 110, or in 253 CLR 560 at page 598. In paragraph 84 of the joint reasons, in the third line:

The equitable doctrine which protects expectations, with which the notion of “detriment” is associated, is not concerned with loss caused by a wrong or a breach of promise.  As Deane J observed in The Commonwealth v Verwayen, “[e]quity has never adopted the approach that relief should be framed on the basis that the only relevant detriment . . . is that which is compensable by an award of monetary damages”.

And then the Court goes on to say:

The equitable doctrine concerning detriment is concerned with the consequences that would enure to the disadvantage of a person who has been induced to change his or her position if the state of affairs so brought about were to be altered by the reversal of the assumption on which the change of position occurred.

And footnote 230 gives the reference to Delaforce v Simpson‑Cook, relevantly, at paragraph [5].  Then, in paragraph 85, the court states that:

This view accords with the understanding of detrimental reliance sufficient to ground an estoppel, as explained in Grundt v Great Boulder Pty Gold Mines Ltd –

just as Justice Allsop had invoked that reasoning by Sir Owen Dixon in paragraph 5 of Delaforce.  At paragraph 88, there is a reiteration of the point about non-pecuniary detriment:

Detriment has not been considered to be a narrow or technical concept in connection with estoppel.  So long as it is substantial, it need not consist of expenditure of money or other quantifiable financial detriment –

There is no reason why the question of whether the residents of these cyclone‑damaged buildings in Northern Queensland could not be expressed in non‑financial terms, such as the strain and anxiety of living in damaged buildings which had not been repaired for 12 months.

STEWARD J:   Once again, was evidence led about strain and anxiety?

MR JACKMAN:   No, but in our submission, it is an obvious inference to draw that it is an opportunity.  The opportunity of having repair work done earlier could have been beneficial to the residents in alleviating what would be, in the ordinary course of human affairs, a very strong source of anxiety.

STEWARD J:   Can I ask you a question I meant to ask you before?  On the question of “doomed to fail”, why is that not just simply an objective question?  Why does it matter what parties may have mistakenly thought were their prospects of success at a particular historical point in time?

MR JACKMAN:   It is an objective question.  It does not depend on what the parties thought, but it is very relevant to see how the trial judge in this case viewed it, because although the trial judge ultimately comes down to a firm conclusion on the point, his Honour is the one who has had to weigh up the competing arguments and makes it quite clear that this was not a demonstrably clear case to his Honour’s mind as the judge.

STEWARD J:   But in assessing what is the opportunity you have lost, now that we know – and it is all agreed – that you would not have gotten any money, what is the measure of that opportunity that is left?

MR JACKMAN:   No, that is not agreed, because there could well have been a compromise of litigation brought at an earlier stage.

STEWARD J:   So it is not a lost opportunity to sue, but a lost opportunity to settle?  To sue being the way of getting us there.

MR JACKMAN:   That is the possible benefit, yes.

STEWARD J:   All right.

MR JACKMAN:   There is no reason to think that if the case had actually been heard and decided in mid‑2017, rather than in 2020, that the outcome of the judgment would have been different.  The matter may not have gone to judgment because there may well have been a compromise of a case brought at an earlier stage when there had not been a history of frustration, delay, and so on.

GLEESON J:   Does the opportunity have to be an opportunity of recovering more than the $200,000 you received, plus the $918,000 that you were offered?

MR JACKMAN:   The opportunity of that – yes.  If our chance was limited to that, then we could not point to any further lost opportunity.

If I can, then, turn to the Full Court’s reasoning?  The heart of it – while it is a lengthy passage in the majority judgment which goes from paragraph 206 through to paragraph 225 – but the salient points in the Full Court’s reasoning – paragraph 207, in dealing with not having sued Allianz early in the piece.  Paragraph 207 begins by saying that:

his Honour was in error in finding that it was ‘impossible to tell’ how a dispute between Delor and Allianz may have played out if Allianz had denied the claim from the beginning.  It is to pose the issue of detriment too narrowly to ask, as Allianz does, whether the result may have been different.  Litigation is an uncertain process.  Most disputes are resolved rather than determined by a court hearing.

So, that is the real chance or opportunity which was foregone.  Then:

The intervening period and change of position on the part of Allianz after the passage of a considerable period of time meant that the parties came to join issue in their dispute after a lot of water had passed under what had been the agreed bridge between them.  By then, they had a different dispute. 

Encompassing issues arising from their responsibilities, and so on – together with – as I took the Court to yesterday – a very strong sense of frustration on the part of my clients, that the delay and inactivity of the insurers in getting work done which they agreed was their responsibility.

Then, at paragraph 213, the Full Court majority turns to the detriment in not taking steps to carry out the repairs – or, to put it more fulsomely – the lost opportunity on the part of my clients of carrying out repairs during that 12‑month period.  Again, paragraph 214, reiterates that the trial judge’s approach:

was to find that it was impossible to tell what would have happened.

And 215 refers to:

evidence in the form of self‑serving guesses . . . would not have been helpful.

And:

his Honour proceeded on the basis that it was impossible to tell how the repair works would have ‘taken shape in terms of funding and responsibility’ . . . This is to recognise the reality that litigation in the form which ensued after Allianz resiled from the terms of the May 2017 Email was not the only possibility as to how events may have unfolded if the May 2017 Email had not been sent and relied upon by Delor for over a year.

Then at 217, the majority, in our submission, correctly rejects the proposition that there must “be evidence of a counterfactual”, relying again on Delaforce at paragraph 5.  In our submission, those lost opportunities are sufficient to establish detriment for the purposes of the estoppel in this case.

There is a further point I need to deal with, which is a pleading point, or a procedural fairness point, which my learned friend raises in relation to the lost opportunity of suing Allianz earlier.  It is not a point which he puts in relation to the lost opportunity in not undertaking repairs at an earlier point in time and, in our submission, that argument was correctly rejected by both the trial judge and the majority of the Full Court.

Dealing first with the reasoning of the trial judge, at paragraph 334, core appeal book page 97.  The argument that was put at first instance is summarised at the start of paragraph 334, a submission that my client:

did not plead or prove any detriment as to loss of opportunity and did not lead evidence as to what it would have done.

So the argument is put on the basis that loss of opportunity was not raised.  The trial judge then says – or the concise statements which, of course, are not the pleadings:

did not go into particularity of some counterfactual.  The opening submissions (and the facts themselves plainly) raised the question of loss of opportunity to conduct its affairs on the correct hypothesis.  Guesses in self‑serving evidence . . . would not be very helpful.  The obvious objective facts are that Delor Vue would have had to have taken on the repair work itself, denying to the insurer any access to the premises.

The opening submissions are not in the appeal books, nor is a lot of the material going to the conduct of the trial and the appeal.  Perhaps that reflects the fact that there is no specific ground of appeal that raises this question of procedural fairness.  My learned friend’s written submissions only deal with it in a very perfunctory way.  The opening submissions are extracted relevantly by the full Court majority at page 171; paragraph 177 extracts the written opening submissions which were focused on the claim of election:

The submissions then stated –

Dropping down about halfway through that extract, the applicant:

allowed for the repair investigations and works to be handled largely by the respondent at its pace.  It is not now possible to confer upon the applicant the various opportunities it would have had to conduct itself differently had it not been led to believe that the respondent’s position was as represented.

There was an articulation of a loss of opportunity case.  Then, going to paragraph 178 on the next page, the Full Court majority points out three aspects of detriment, the relevant ones are 2 and 3.  There is no complaint as to the second by my learned friend as a matter of procedural fairness.  The complaint now about the third aspect is confined to the loss of opportunity to sue Allianz earlier.  In paragraph 180, the Full Court majority says that was:

expressed in general terms, did not open a case that there was some specific opportunity that was forgone.  Rather, it was a claim that Delor would have acted in the intervening period (of over a year) on the basis that indemnity was denied by SCI, an opportunity that cannot now be restored to Delor.  In effect, it has lost time and cannot go back to do what it would have done to advance the repairs in the period when the parties were acting on the basis of the May 2017 Email.

That dealt with the way in which the argument was put at the trial – that is, that there was no procedural fairness afforded to Allianz in disclosing a case based on loss of opportunity.

If I go back to paragraph 166, the Full Court deals with the two specific lost opportunities which were put forward as the instantiation of the general proposition of lost opportunity.  This follows a passage from 160, which quotes from the concise statement, and 162 talks about this not being a claim that Delor pursued some other course.  The claim was that for 12 months, the parties gave effect to the May 2017 email, in the respects identified by Delor.  Then 166 poses the question:

How had Delor changed its position? . . . by giving effect to the May 2017 Email.  What had it done?  It had left everything to Allianz to arrange.  Necessarily inherent in those claims was an allegation that Delor had not itself taken steps to pursue its claim against Allianz and arrange the repairs.  There was no claim that there was some special consequence that flowed from those steps that was not inherent within them.  That is to say it was not claimed that it was to be more difficult or more costly or more burdensome to undertake the repairs.

In our submission, that is a correct conclusion to draw from the nature of the claim as articulated in the concise statements reinforced by that opening submission I took the Court to.  The point is made again at paragraph 202 in the Full Court’s reasons, page 180, in the third line:

As it has been explained, implicit in the detailed plea as to what Allianz did is a case that Delor did not do those things.  In effect, Delor’s claim was that there had been a delay of 12 months when it did nothing and left things to Allianz when it came to the works.  It is a claim that as a matter of fact, because of the May 2017 Email, it did not take matters into its own hands, undertake the work and pursue Allianz.

That, in our submission, is a correct way of assessing the question of procedural fairness as to whether the loss of opportunity case was fairly disclosed and, in our submission, that case, if it is to be entertained, should be rejected.

I wanted to come next the question of utmost good faith – sorry.  Can I go back to your Honour Justice Steward’s question about a souring of the relationship?  That word, in fact, is not used, but there are two findings which I wish to take the Court to.  One is at core appeal book, page 59, at paragraph 171.  Your Honours will see in 171 reference to the correspondence in February and March of 2018:

These terms created some frustration in Mr Key and BCB.  This frustration, in particular as to the handling of matters, was reflected in Mr Key’s email . . . of 13 March 2018 –

Then, at paragraph 173, his Honour finds that:

By this time –

That is, 21 March 2018:

one can certainly see in the correspondence a certain fraying of the relationship arising from the slowness and complexity of the claim adjustment, the pressure of renewal and the growing likely size of the loss (to both the insurer and the body corporate).

STEWARD J:   Thank you.

MR JACKMAN:   Then, of course, we have the 3 May letter that I took your Honours to yesterday which shows a high degree of frustration on the part of the body corporate at the delays of over a year.  Now, utmost good faith, can I begin with ‑ ‑ ‑

GLEESON J:   I am sorry, Mr Jackman, is there any issue if there is reliance of the kind that you – or that the court did not err in finding detrimental reliance of the relevant kind as to the proportionality of the remedy?

MR JACKMAN:   No.  That is not raised in the grounds of appeal, nor to my recollection was it raised in any submissions that have been put by the appellant, but it is certainly not a ground of appeal and it is not something which we propose to address.

GLEESON J:   Thank you.

MR JACKMAN:   Now, on utmost good faith, can I begin with the terms of the statute?  If your Honours have available section 13, which is reprinted in the joint book of authorities, volume 1, page 9.  Subsection (1) provides that:

A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party –

Now, the important words arise:

in respect of any matter arising under or in relation to it –

That is the contract of insurance:

with the utmost good faith.

Those words, “any matter arising under or in relation to” the contract of insurance, are as absolutely general as their ordinary meaning indicates.  There is no available construction of that section which would confine it to legal duties owed under the contract.  It applies equally to powers and discretions or, indeed, any provision or matter under the contract, but it also applies to matters in relation to the contract.  So it obviously applies to precontractual disclosure matters, but it also applies to a lot of aspects of the parties’ conduct which are not specifically provided for in the contract, for example, claims administration matters which fall equally to be assessed in terms of utmost good faith.

Even though there may not be a specific provision of the contract which deals with the question of the insurer, for example, treating insureds respectfully in matters of claims administration and timely handling of claims, as was recognised in CGU v AMP, the duty of utmost good faith extends to the timely response by an insurer to claims by the insured, and there would be many matters which are not, strictly speaking, contractual matters, but they relate to the contract of insurance.  The duty of utmost good faith is imposed in relation to all of those matters as well as to matters which strictly concern contractual provisions.  So the attempts by our learned friends to confine section 13 to matters pertaining to the performance of the contract or analogous matters of a legally binding nature is a most unwarranted misreading of the terms of section 13 that are deliberately cast in that absolutely general way.

In our respectful submission, the use of the kind of language in CGU v AMP of commercial standards of decency and fairness is an appropriate way to capture the meaning of utmost good faith, once one rejects the argument that utmost good faith requires, simply, honest conduct.  The appropriate way of conceptualising the duty is to have regard to commercial standards of decency and fairness.  My learned friend, Mr Prince, preferred a formulation in terms of legitimate interests of the insureds, but that does not really advance matters because one of the legitimate interests of the insureds is for their insurers to conduct themselves according to commercial standards of decency and fairness.

One goes around in circles and comes back to the point that there are identifiable standards of decency and fairness.  Certainly, the standards are open‑textured and open to interpretation and contest, but that is inherent in the way in which the legislature has cast section 13, and one cannot get away from what the Full Court majority rightly said is an evaluative matter.  The Parliament, in enacting section 13 was, clearly, trying to move the law away from the kind of bright lines that had allowed a good deal of conduct which, according to commercial standards of decency and fairness, was simply not appropriate on the part of parties.

That, then, takes us to the elements of the conduct of Allianz which are identified the trial judge at paragraph 347, which we respectfully adopt and add one or two additional comments to.  But, as the Full Court indicates, none of these elements in paragraph 347 were challenged, as such.  The challenge was to the overall conclusion that the conduct that is encapsulated here amounted to a breach of utmost good faith.  The salient features of his Honour’s reasoning begin with:

The conduct of Allianz was a resiling from a considered position (taken with legal assistance and against the opinion of a senior underwriter of SCI) of a claim of significant financial dimension to an insured who had –

for over a year:

been open, co‑operative and responsive in the provision of information.

His Honour then refers to a degree of terseness – which I should add to my answer to your Honour Justice Steward – developing by May 2018 in the communications, but that in no way justified Allianz going back on its representation or promise of a year earlier, which had given it the benefit of full possession of the site and cooperation of the insured, which ‑ ‑ ‑

GLEESON J:   It is a quibble, but the insurer was not given full possession of the site.

MR JACKMAN:   They were given full possession of the site, not to the exclusion of all others.  So it was not full possession in a landlord‑and‑tenant sense, but they were given full possession in the sense that they had the ability to roam over the entire site in conducting their investigations and in formulating their scope‑of‑works and method for repair.

His Honour cannot be taken as meaning “to the exclusion of the residents”, who were living with the interruption of having various personnel investigating and assessing their methodology of repair.  But we would add to that sentence the use of the rights of subrogation, which I took the Court to yesterday, and Allianz’s control over the works, to the point where my client was in the position of trying to persuade Allianz to about how to go about the work; but Allianz, of course, had the ultimate control over the works that would be adopted, and insisted on that right through to May 2018.

Then, dropping down below the reference to “commercial standard of decency and fairness”, his Honour refers to:

The persons who made up the interests behind Delor Vue –

being:

ordinary people.  The damage to their properties will be (as was always evident) expensive to remedy.  The policy terms will see a division of responsibility for that.  The position taken in the 9 May 2017 email was clear and . . . honourable and also, probably, in the perceived commercial interests of Allianz.

We interpolate there that his Honour probably has reputational issues in mind in making that observation:

That is probably why it was taken – for all those reasons.  A year was spent adjusting the claim, taking advantage of the rights of access to the property, and obtaining the co‑operation –

And we add to that subrogation and control of the work:

Then, for reasons that have never been explained, a take‑it‑or‑leave‑it offer was made, resiling from the . . . email.

And then:

Even if it be that the division of financial responsibility in the 28 May 2018 letter turns out to be the correct division, there was still a lack of decency and fairness in the position that was taken.

Can I take up another of your Honour Justice Steward’s questions yesterday to me, which was: would our position be different if that $918,000 and $3 million‑odd split was ultimately correct?  No, it would not.  His Honour Justice Allsop deals with that in this passage, and then says:

If that was Allianz’s view, a view reached after all the advantages of access to the property, adjusting the claim, and expecting and being given the co‑operation of the insured, decency and fairness required an offer to arbitrate or litigate the loss in some acceptable dispute resolution forum on the basis that the 9 May 2017 email represented or promised:  the policy terms.  Decency and fairness were not displayed by threatening an approach previously clearly disavowed which involved further significant personal strain and financial risk to these people, unless a take‑it‑or‑leave‑it offer was accepted.

Of course, one has to take all of those matters together all‑in‑all, not individuated and attempts made to pick one or two of them off as individually not amounting to a lack of utmost good faith.  It is the combination of all of those circumstances which leads to the primary judge’s conclusion of a breach of section 13.

GLEESON J:   Mr Jackman, are there not some important contextual matters left out of this?  No doubt your client had to expend money in obtaining expert reports.  The insurers also expended money in obtaining expert reports and adjusting the claim, and, in addition, they paid money to your client.  The idea that they had an advantage of access to the property, to my mind, seems to be a very incomplete statement of what was going on in the relationship between the two parties.  Your client benefitted and the insurer suffered expenditure.

MR JACKMAN:   Those are contested matters, in our submission.  Did we benefit?  Well, we received $200,000, but even the insurer ‑ ‑ ‑

GLEESON J:   Is that not a benefit?

MR JACKMAN:   Yes, but the insurer itself in the 28 May 2018 letter recognised the liability of $918,000.  The $200,000 is a long way short of what Allianz itself was acknowledging it owed us.  It is our underlying contention that that is an underestimate of Allianz’s liability.  That, even on its own figures, it was only paying out 20-odd per cent of what it was liable for.

GLEESON J:   Well, the loss, as opposed to what it was liable for.

MR JACKMAN:   The loss for the insured components, the $918,000 is what Allianz says in our financial response is Allianz’s financial responsibility.  The rights of access – yes, they do need to pay the professional consultants who are engaged in that work, but that is, first of all, the natural consequence of Allianz having accepted the claim, and it is just ordinary course of business for an insurer which accepts the claim to undertake those costs.  It is just an ordinary cost of doing business.

But it does give Allianz a great benefit in this case, because they are the ones – as long as they admit the claim, they are the ones who determine the method of repairs and the scope of works.  That is a right which they were exercising very fully to the point where they were insisting on their method over suggestions that emanated from my client.  There is a very direct benefit to Allianz in being able to dictate what method of repair work would be done, particularly in circumstances where, on the Allianz view of things, we are going to have to pay a lot more than they are for that very work.  So Allianz did derive very substantial benefits from the rights which they exercised over that 12‑month period.

If I can go then to the Full Court’s reasoning – the majority reasoning at paragraph 252, page 192.  In paragraph 252, the majority judgment refers to the decision being an evaluative one:

to be made by reference to all of the circumstances of the case.  The primary judge examined those circumstances with considerable care –

and made detailed findings.  Then it is pointed out:

The appellant did not seek to challenge those findings –

and that remains the case in this Court:

choosing instead to point to the conclusion that had been reached by the primary judge at the end of that process as demonstrating that Allianz could not be said to be acting without utmost good faith.

And the Full Court majority rejects that conclusion.  One point that appears to have been put forcefully before the Full Court was that the ultimate finding, that Allianz had a good defence under section 28(3), destroys our case of utmost good faith, but the Full Court points out at paragraph 247 to 249 that that rather mixes up the chronology of events, because the decision on utmost good faith has to be made with reference to what Allianz did in May 2018 and Allianz cannot deploy with the benefit of hindsight what was found two years later in May 2020 as justifying conduct in May 2018 at a time when there was no determination on the 28(3) issue.  Indeed, there was no extant issue on 28(3) for 12 months until the 28 May letter was written.

A further submission that is made in this Court is that a breach of the duty of utmost good faith requires some proof of detriment.  In our submission, there is absolutely no warrant for reading that in to section 13.  Indeed, principle would indicate the opposite.  What section 13 does is to impose an implied term of the contract of insurance.  Whether there has been a breach of a term of a contract does not depend on whether loss has been caused by the breach.  That is a separate question when we come to the question of remedy, particularly a remedy of damages.  The breach itself does not require any proof of loss and there is no reason to suppose that the standard of utmost good faith is pregnant with some unspoken requirement that there be some loss or detriment proved on the part of the claimant when the breach is a question of assessing the conduct of the other party.  It is, in our submission, an unjustified gloss.  The submission is an unjustified gloss on the plain language of section 13 and does not find any support in this Court’s reasoning in CGU v AMP.

Then a point was sought to be made by my learned friend, Mr Prince, about the remedies that were granted.  That is not a matter raised in any ground of appeal and this Court should not entertain any argument about the remedies not being appropriate.  The remedies, in fact, which were granted were two declarations, which one sees at pages 108 to 109, and again, for that matter, 111 and 112.  But at the foot of 108 there is a declaration at 5 which pertains to the breach of section 13, and declaration 6 is then consequential on that.

We, for our part, did not understand Mr Prince’s reference to injunctions because there was no injunction granted.  There is no need for an injunction.  We do not suppose that we will need to have Allianz punished for contempt of court because we trust that Allianz will abide by the declarations of right that were made in paragraphs 5 and 6 of the orders.  But, as I say, there is no ground of appeal going to the remedies and no occasion for this Court to give the matter any consideration.

GLEESON J:   What about the ground of appeal going to the establishment of loss justifying relief?

MR JACKMAN:   Yes, that is the proposition that one requires some loss or detriment in order to establish a breach of section 13.

GLEESON J:   Or to justify relief.

MR JACKMAN:   Yes, but there is no complaint about – there is no separate complaint about the relief granted in these proceedings.  The proposition that is raised by ground 4(b) is the argument that a breach of section 13 requires proof of loss or detriment by the party complaining of the breach, otherwise one does not get relief.

Now, if we are right about that, then there is absolutely no reason why the declarations should not have been granted.  But there is no separate complaint that the declarations were inappropriate for some reason other than the submission that the breach of the duty required some proof of loss.

There was a claim for damages, but that fell away with the declarations because damages are otiose when the declaration have been made which fully meet the exigencies of the case, so it is a matter of complete irrelevance whether there is or is not some loss suffered by my clients as a result of the breach of section 13.

The argument yesterday about the remedy seemed to proceed on the basis that an injunction had been granted, and that should not have been granted unless damages were inadequate and therefore one had to consider loss.  But the argument was misconceived because one does not find in the orders anything remotely in the nature of an injunction.  There is no reason why declarations 5 and 6 were not entirely appropriate once the court had found the breach of section 13.  Unless there is anything further on which I can assist the Court, those are our submissions.

KIEFEL CJ:   Yes, thank you.

GAGELER J:   Mr Jackman, there is a question that I wish to ask you.  It relates to the utmost good faith argument as articulated in your written submissions.  Paragraphs 27, 72 and 73 present a version of the argument that starts by saying that a particular obligation that flows from the general duty to act in the utmost good faith is to make and communicate a decision to accept or reject the claim in a timely manner; that says that the interest of the insured, that is respected and protected by that instantiation of the general obligation, is not:

being left in an ongoing state of uncertainty.

And that then, as I understand, the argument says, an ability to resile from the decision once made and communicated, without some substantial reason, perhaps, is inconsistent with the interest in certainty that is protected by the specific obligation to make and communicate the decision in a timely way.  Do you persist with that?  I did not hear you put it orally quite that way.

MR JACKMAN:   I am sorry.  Yes, we do persist with that.  It is reflective of the last sentence in paragraph 15 of CGU v AMP, that your Honours were taken to yesterday, in volume 2 of the joint book of authorities, page 152, or 235 CLR, at page 12.  The last sentence, at paragraph 15, refers to:

Such an obligation may well affect the conduct of an insurer in making a timely response to a claim for indemnity.

The need for a timely response is not just a hollow need – that is, it is not something which is done just for the sake of making a response.  It is in

order to put the insured in a position of certainty as to its claim – which, to the logical corollary of good faith requiring timely responses to claims, is that insurers not back‑peddle on their response willy‑nilly because what the insured is entitled to is certainty on its position.

EDELMAN J:   Do you need qualifications like “willy‑nilly” or is the obligation ‑ ‑ ‑

MR JACKMAN:   I do not need them, no.

EDELMAN J:   The obligation is one, as I understand your submission, to make a timely, irrevocable response.

MR JACKMAN:   Yes, that is right.  Yes.  So I do not need the reference to “willy‑nilly” which, perhaps, reflects the question Justice Gleeson put yesterday about capriciousness.  It certainly strengthens the argument for a breach of section 13 that no explanation was ever given – and does not seem to be available for the resiling by Allianz of its decision of a year earlier.  But I do not need it in order to make ‑ ‑ ‑

EDELMAN J:   But there is no finding, here, of capriciousness.

MR JACKMAN:   No.  There is simply a finding that no explanation was given, and none was apparent in the evidence.

GAGELER J:   Mr Jackman, sorry, a final question.  I do not mean to cut you off.  There is a footnoted reference to CIC Insurance – your footnote 28.  I do not think that is a correct reference.  I do not expect you to find the correct reference now, but would you be able to supply the correct reference in due course?

MR JACKMAN:   Yes.  I apologise for that.  If we can, perhaps, respond in writing when we find the correct reference?  I am sorry for that error there.  May it please the Court.

KIEFEL CJ:   Yes, thank you, Mr Jackman.  Mr McLure, how long do you think you will be in reply?

MR McLURE:   No more than 20 minutes.  Your Honours, in relation to election, as to our learned friend’s submissions, which identify different formulations of the expression which we say is the correct one – inconsistent rights from the authorities – we have given your Honours the references at paragraph 6 of our submissions in reply to demonstrate that, in each of the cases where a different formulation of words has been used, the actual circumstances of the case were dealing with the contest between inconsistent rights.

As to the issue concerning the correct interpretation of Craine, as we see it, the disagreement between the parties has now resolved to this. Justice Isaacs used the language of “termination” at 28 CLR 319. If that word is given its normal legal meaning, then the dictum of Justice Isaacs in relation to election is conventional. But, if it is to be given a wider meaning that is contended for by the respondents, then it is a proposition that has not otherwise been picked up by this Court in any of the subsequent occasions it has dealt with in election or waiver. It also means that what the majority said in Agriculture and Rural Finance at paragraph 58 is incorrect.  For the reasons we have given yesterday, we submit that would not be the correct approach to Craine.

EDELMAN J:   What if it is understood as a reference to circumstances where the performance of one obligation is a condition precedent for counter‑performance?  So the timely notification was a condition precedent for the counter‑performance of the obligation to pay.

MR McLURE:   Then we are in the territory again of automatic operation, and, for the reasons I gave yesterday, I submit that does not engage an orthodox view of election.

EDELMAN J:   It looks a lot like what Lord Goff is saying in The Good Luck.

MR McLURE:   Quite so.

EDELMAN J:   You say the House of Lords decision in The Good Luck is bad law in Australia?

MR McLURE:   No.  Fertile ground for estoppel is what I meant by acceding to that proposition.

GLEESON J:   One way of reading paragraph 58 of Gardiner is that it recognises that Craine operates in relation to a true election, but it does not pick up the full operation of Craine on the reading that Mr Jackman proposed.

MR McLURE:   Yes.

GLEESON J:   In other words, Craine went a bit further than the Court acknowledges at paragraph 58.

MR McLURE:   If your Honour could forgive the repetition, if it did, and it operates in the way that our learned friend does, that is a proposition which has never been subsequently embraced, and of course, this was the dictum in Craine.

To your Honour Justice Gageler’s question in relation to approbate and reprobate, to the extent that this is helpful, could I give your Honour a reference in Agricultural and Rural at 238 CLR 588, paragraph 57? Viscount Maugham is cited by their Honours in the joint judgment as also referring to the origin of the approbate/reprobate expression as being one which found its source or if not first destination in equitable election. If your Honour is on CLR 588 at footnote (74), your Honour will see their Honours refer to Mr Wilken’s book, the second edition. There is a third edition of that book, but I do not have it in court with me.

In the third edition, Mr Wilken also observes that the approbate/reprobate idea first found its discussion in equitable election and had been subsequently endorsed – or used, rather – in some of the common law election cases, but Mr Wilken does not say which ones.  The only ones that we are aware of are Craine and Lissenden, as cited by the majority at paragraph 57 of ARF.  But the import of your Honour’s question I think was, does the reference to the expression “approbate” and “reprobate” give rise to some separate independent principle.  We cannot point to any authority where that has been said to be so, and Mr Handley does not say so in his book, nor does Mr Wilken in his.

EDELMAN J:   Can I suggest one to you?  If the insurer, rather than making a promise to indemnify, had actually paid out – so it was not going to do the work itself; it was just going to pay for the work to be done – and had actually made the payment – and I appreciate that some of the payment was made – would that not constitute a waiver?  No detrimental reliance, but a full payment in acceptance of the claim.  Could it then subsequently turn around and say, no, we revoke our waiver of the breaches?

MR McLURE:   One could describe it as a waiver if one is not identifying a separate legal principle.  It is not necessary for waiver to supply a separate legal answer to that problem, because it is otherwise dealt with by the law in relation to restitution and the David Securities proposition about whether or not the money could be reclaimed on the basis of a mistake subject to change of position.  Waiver adds nothing to that body of the law.

EDELMAN J:   Well, it may, because there may be a question as to whether or not, under Australian law, the recipient has got a right to keep the money.  And whether or not they have a right to keep the money may depend on whether you waived the condition precedent to performance.

MR McLURE:   Our submission is that David Securities supplies the answer to the question whether the insured is entitled to keep the money.  It can keep it if the money was either not paid under a mistake or it changed its position – on the estoppel issues.  As to the refrain from suing Allianz sooner, the way in which it has been now put by our learned friend here is somewhat different to the way it has ever been put before – bearing in mind this is an idea about loss of opportunity to settle, which emerged in the judgment of the majority in the Full Court for the first time in this litigation.

The extra component that our learned friend puts on it here is to say not just a loss of opportunity to settle, but a loss of opportunity to settle when the parties were on amicable terms.  That has never been put before; not disclosed in concise statement or in the list of issues; not argued; no evidence about it.  Our learned friend, we submit, correctly conceded in answer to your Honour Justice Gleeson’s question that, in order for that proposition to have been evaluated, it would have been necessary to demonstrate for the opportunity that is said to have been lost to have been valuable, it must have been an opportunity to settle on terms better than what Allianz had actually offered, which was pay the 200, plus offered the extra 900 or so, and there was simply no evidence about that at all.

As much as it pains me to talk about waiver in other contexts, if that had been the case, then what that would have given rise to is issues about waiver in relation to settlement communications.  There was no evidence before the Court about that, for obvious reasons.  The findings that our learned friend relies on in relation to ‑ ‑ ‑

KIEFEL CJ:   I suppose your reference to waiver of settlement communications raises the question of waiver of privilege as a species of waiver and that stands distinct from election.

MR McLURE:   Yes, quite.  It is ultimately of no assistance in deciding whether or not there is a separate species of waiver on that spectrum I offered to your Honours yesterday.

KIEFEL CJ:   Why is that so?  It was mentioned in Rural Finance actually as a distinct species.

MR McLURE:   Yes.  Isolated to those circumstances, of course, but the ‑ ‑ ‑

KIEFEL CJ:   But there has to be some underpinning doctrine which says that there is a reason why you cannot waive a privilege and you cannot return to your previous position and claim the privilege.  Is it the same as the underlying doctrine in relation to election which is that it is unjust for a person to approbate and reprobate?

MR McLURE:   Not only that, but in Maurice v Northern Territory and Mann v Carnell, the analysis there is that by propounding the erstwhile privileged communication, that destroys the privilege in it in the same way that an election might.  It is described in that ‑ ‑ ‑

KIEFEL CJ:   Inconsistent rights.

MR McLURE:   Yes.

KIEFEL CJ:   So, you say it is a true election rather than a distinct waiver.

MR McLURE:   Yes.  Self‑evidently, the ability to claim privilege over a communication which one has proffered in court, then destroys the right to claim it.

KIEFEL CJ:   There are no two inconsistent rights, though, one of which destroys so that you can take the benefit of the other in waiver of privilege, though, is it?  You either waive the privilege or you do not.

MR McLURE:   That might be right, but you destroy the right by propounding it.  There can be no other alternative. 

The findings that our learned friend relied on, in relation to the loss of the opportunity to settle on amicable terms, were the findings in the primary judge’s judgment, at paragraphs 171 and 173.  These were said to be findings of a deterioration in the relationship in the course of trying to work out how and when the repairs were going to be done.  Those findings, though, all preceded the change of position of Allianz so, whatever effect those matters would have had, they would have occurred, in any event, because of the inherent problems with the roof.

As to the proposition put that the detriment here was strain and anxiety on the part of unit owners – again not disclosing the concise statement, not in the list of issues, no evidence about it – it seems to carry with it the misconception that what was actually happening here is that all of the occupants of these units were living in apartments without roofs.  The evidence does not support that at all and, in any event, did not fully explore it.  The evidence is that of that $200,000 that was paid by Allianz, that was to make watertight and secure all of the apartments until the long‑term repair was done which was essentially latent defects in relation to the problems with the trusses.

GLEESON J:   And I think pay rent for alternative accommodation.

MR McLURE:   Yes, that is right.  The second element of the estoppel case is in relation to carrying out the repairs sooner.  Our learned friend said to your Honours this morning that we, Allianz, do not take the point that that was not pleaded, or there is a problem in relation to procedural fairness.  That is not correct.  We accepted yesterday that the list of issues – issue B – raised the point about Allianz having conduct of the repairs at its own pace.  However, we drew attention to paragraph 196 of the majority’s reasons which held, unchallenged here, that the further elaboration of that in the closing submissions put for Delor to the primary judge in relation to Allianz – correction, Delor ‑ being able to have done the work sooner was well outside the case.

A demonstration of that is the way the argument has been put here.  Here, the argument that was put to your Honours yesterday was that the repairs to units 36 and 26 could have been done first and the remainder of the repairs done later.  That argument has never been put before in this litigation.  That argument was made by reference to the first GHD report.  I just want to take your Honours to two documents just to explain the disconnection between our submissions and our opponents’.

If your Honours have the appellant’s book of material at page 160, this is the first GHD report.  This was the report that our learned friend relied upon to say there was another alternative, which was to do units 36 and 26 first.  The problem – as disclosed in this report at about point 6 on page 160 – is that, at the time that the authors of this report inspected the property, they had no as‑constructed documentation.  So, what they said – if your Honours go to page 164 and 165 – 164 in the table, on their observation, there were some trusses that were damaged.  Then page 165, their recommendation was that:

The roof trusses appear to be generally in a good condition and could typically be retained –

So, this was the basis of our friend’s submission, that 36 and 26 could be done then, and anything else that needed to be done could be done later.

The second GHD report, which I took your Honours to yesterday, starts at page 181.  That is December 2017, they have gone back for another look and they have taken another consultant with them.  They have arrived at an entirely different conclusion – which was the one at page 194 and 195 I took your Honours to yesterday – which was, in fact, that all of the roof trusses needed to be replaced.

I draw attention to that only to make the point that because the parties did not engage on this issue at the trial, there is no findings about whether or not, really, an opportunity was lost.  This demonstrates why this is more than just a pleading point.  The parties never actually engaged on the evidence.

STEWARD J:   Do you accept what was put, that under the May 2017 arrangement Delor Vue was to do no actual building work, but merely to pay for some of it?

MR McLURE:   No.  I know your Honour’s question was about the 9 May 2017 email.

STEWARD J:   Yes.

MR McLURE:   What transpired from 9 May 2017 and following was discussion between the parties about what work needed to be done and then a debate emerged about, even on Allianz’s view of the exclusions, whether the exclusions actually applied.  But where that arrived at is – if your Honour still has the appellant’s further material at page 247, the 28 May 2018 letter, our learned friend’s submission on this point concluded at paragraph 2.10, which is at page 256, and on the basis of what appears in paragraph 2.10, our learned friends urged the conclusion that Allianz was to do, and then effectively charge, Delor Vue for the work.  But what that fails to take into account is paragraph 2.9(b) immediately above it.

KIEFEL CJ:   That is a change from the previous arrangement, is it not?  It was just payment before.  The body corporate in the 9 May letter was not said to have to arrange it itself.

MR McLURE:   I have to accept that there is a level of ambiguity in the 9 May 2017 email, because it says this work needs to be done first; it does not explicitly say who needs to do it.  I equally accept that in the months that followed, the engineers and builders who were engaged by Morse were looking at how it could be done in a coordinated way.  The parties never agreed one way or another that it was to be Allianz that would do the work.

STEWARD J:   Is there a finding about why Delor Vue was itself engaging GHD to prepare these reports?

MR McLURE:   Your Honour, I am not certain about the finding, but the evidence plainly demonstrates the answer, which is initially – for the reasons I have just explained – the August 2017 GHD report offered the view that actually only a few trusses had a problem.  That is the first reason.  The second reason was the point I took your Honours to yesterday, which was in February 2018.  The Body Corporate manager, Mr Key, had devised his own alternate work method, which involved laying new trusses alongside the old ones.  That alternate work theory followed the second GHD report in December 2017, which ultimately reached the same conclusion as Allianz’s engineers that all of the trusses needed to be replaced.  That is the estoppel point.

Finally, in relation to good faith, could I just take up the interaction between our learned friend and your Honour Justice Gleeson in relation to whether or not there is a ground concerning the declaration?  We reiterate what was said yesterday by Mr Prince in relation to ground 4(b).  It was a claim for damages.  A declaration was made instead of the claim for damages because, we submit, no damages were approved.  As to the point about injunction, as was observed yesterday, in order for such an order to have been made, it needed to be demonstrated that damages were not an adequate remedy, and no attempt was ever made to do that.  So, we submit what we are complaining about as well within ground 4(b) for those reasons.

Finally, to your Honour Justice Gageler’s question concerning the submissions that the respondents at paragraphs 72 and 73.  While we accept that the duty of utmost good faith may require an insurer to notify promptly its decision about indemnity, there is no authority for the proposition that that would be an irrevocable position to take.  If the Court was to adopt that conclusion, that has very large consequences.  The duty of utmost good faith is a mutual obligation.  It would have the consequence that it would cut both ways; that is to say, an insured would not be able to change its position in relation to the formulation of its claim and an insurer would not be able to change its position in any respect in relation to how it would resist it.  That, for the reasons we have offered yesterday, creates unworkable consequences and makes redundant, again, doctrines of at least estoppel, perhaps election, depending on the context.

Could I be of further assistance to your Honours?

KIEFEL CJ:   Yes, thank you, Mr McLure.  The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow.

AT 11.18AM THE MATTER WAS ADJOURNED