Hdi Global Specialty Se & Anor v Wonkana No 3 Pty Limited Trading as Austin Tourist Park & Ors

[2021] HCATrans 117

[2021] HCATrans 117

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S231 of 2020

B e t w e e n -

HDI GLOBAL SPECIALTY SE ACN 129 395 544

First Applicant

THE HOLLARD INSURANCE COMPANY PTY LTD ACN 090 584 473

Second Applicant

and

WONKANA NO 3 PTY LIMITED TRADING AS AUSTIN TOURIST PARK ACN 156 510 566

First Respondent

FA EDWARDS

Second Respondent

CH EDWARDS

Third Respondent

KEY HOLDING AND INVESTMENTS PTY LTD AS THE TRUSTEE FOR KEY NUTRITION UNIT TRUST TRADING AS THRIVE HEALTH AND NUTRITION ACN 605 173 662

Fourth Respondent

Application for special leave to appeal

KEANE J
EDELMAN J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 25 JUNE 2021, AT 11.37 AM

Copyright in the High Court of Australia

____________________

MR I.M. JACKMAN, SC:   May it please the Court, I appear with my learned friends, MR P.D. HERZFELD, SC and MR T.W. MARSKELL, for the applicants.  (instructed by Clyde & Co)

MR J.C. SHEAHAN, QC:   May it please the Court, I appear with my learned friends, MR D.T.W. WONG and MS N.A. WOOTTON, for the respondents.  (instructed by Clayton Utz)

KEANE J:   Yes, Mr Jackman.

MR JACKMAN:   Can I begin by asking your Honours to go to application book page 27, in the reasons of Justices Meagher and Ball.  Paragraphs 37 and 38 of their Honours’ reasons identify two fundamental aspects of the parties’ intentions in these policies, more specifically, the exclusions to these policies.  Paragraph 37 identifies, in the third line, that:

The insurers have chosen a specific mechanism for determining which infectious or contagious human diseases should be excluded.  That adopted is contained in the Quarantine Act and –

importantly:

presumably is intended to identify serious and highly contagious diseases.

Then at the end of paragraph 38, when their Honours have considered the words “and subsequent amendments”, their Honours say:

It is likely that the word “subsequent” has been included to make clear that the “amendments” referred to include those made to the Quarantine Act after the commencement of the relevant period of insurance.

In other words, the intention is that the means of identifying serious and highly contagious diseases would be by reference to federal legislation which is in force during the policy period.  Now, on one view, there is an inconsistency between those intentions, given the repeal of the Quarantine Act three or four years before the policies were entered into, which their Honours explain in paragraph 34, on the previous page, by reference to the:

reality of the position –

that:

the parties did not know and were not to be taken to have known that the Quarantine Act had been repealed in June 2016 –

and given two inconsistent intentions in the policy language, the question arises whether those intentions are capable of being reconciled by a harmonious construction of the exclusion.

At paragraph 44 in their Honours’ reasons, their Honours introduce what, with respect, is a somewhat unfortunate obstacle in the path of that approach.  The first and foremost reason that their Honours give for reaching the conclusion that their Honours did was that there is a dichotomy between amendment on the one hand and repeal and replacement on the other.  Their Honours do not refer to authority for that proposition, but it is our submission that the authorities in this Court do not support any such strict dichotomy.

EDELMAN J:   That may be correct, Mr Jackman, but there is a distinction between amendment on the one hand and also a repeal and replacement and then on the other hand a substitution of a different regime.

MR JACKMAN:   In our respectful submission, the authorities in this Court indicate that repeal and replacement on the one hand and amendment on the other are not dichotomous.  They are overlapping.  They are different, the High Court said in Attorney‑General v Marquet in their central or focal meaning, but they are overlapping concepts and there is no indication, in our submission, in this insurance policy that the parties intended “subsequent amendments” to be understood in contradiction to repeal and replacement.

Rather, in our submission, the intention that the legislative mechanism should have an ongoing operation during the life of the policy indicates that “subsequent amendments” was intended to refer to legislative changes in the most general terms and that, in our submission, corresponds to the businesslike interpretation à la Electricity Generation Corporation v Woodside Energy.

GLEESON J:   Mr  Jackman, what is the harmonious construction that you give to the words “diseases declared to be quarantinable diseases”?

MR JACKMAN:   The harmonious construction reconciles the fact on the one hand that the parties have chosen the Quarantine Act mechanism as the authoritative listing of diseases.  On the other hand, the parties have evinced an intention that that mechanism would be one that is still enforced during the life of the policy and the way to reconcile those intentions is to treat the word “amendments” as meaning legislative change in the most general way, so that it is capable of connoting what is in fact a repeal and replacement within the meaning of the word “amendment”.

KEANE J:   Is that a formulation that, if put to the officious bystander, the officious bystander would have said, “Of course”?

MR JACKMAN:   Yes, because there is no other way of reconciling the two inconsistent intentions which have been identified by Justices Meagher and Ball.

KEANE J:   Why would not the officious bystander just say, “Well, you just have not provided for the eventuality that has occurred”?

MR JACKMAN:   We are dealing here with a question of construction, not with implied terms, which have to be obvious to the ‑ ‑ ‑ 

KEANE J:   No, but you are formulating a construction that does some little violence to the language of the provision.

MR JACKMAN:   Well, in our respectful submission, the officious bystander would say, “Are the relevant provisions that are in force now under the Biosecurity Act sufficiently similar to those that applied under the Quarantine Act as to be regarded as a subsequent amendment of the Quarantine Act?”, and the officious bystander would be struck by the similarity in purpose and nature of the mechanisms under those two pieces of legislation.

The officious bystander would immediately look beyond the form of the labels used, that is, listing of human diseases versus declaration of quarantinable diseases, and go to the substance of the matter, as to whether the similarities are so striking that the Biosecurity Act mechanisms should be regarded as a subsequent amendment of the Quarantine Act mechanism, bearing in mind that the parties undoubtedly intended that the mechanism chosen should be one which is still in force during the ‑ ‑ ‑ 

EDELMAN J:   Would the Quarantine Act still continue to apply insofar as it is picked up by the clause for diseases that are declared to be quarantinable diseases, even after it is repealed?

MR JACKMAN:   Yes, because what is, in terms of formal label under the Biosecurity Act called a listing of human diseases, falls within the generality of the concept of declaring quarantinable diseases.  Listing is a form of declaring, and the human diseases in question are the quarantinable diseases in the language of the old Act.  That is a formal change, not a substantive change.  They are both mechanisms, but the federal Executive Government achieves the same purpose using slightly different nomenclature.  So that is the first way in which we put the argument, simply as the construction of the ordinary language of the exclusion.

Now, if we are wrong in that, and the Court were to find that the language is so intractable that the Biosecurity Act is not a subsequent amendment, then we fall back on the technique of construction commonly associated with Fitzgerald v Masters.  In the 65 years since Fitzgerald v Masters was decided, there has developed, in our submission, a tendency to treat this as a kind of judicial repair of contracts, and thus to impose very narrow gateways, namely absurdity or inconsistency, for the principle to be applied.

Your Honours will have read in the judgment of Justices Meagher and Ball a reference to the ongoing controversy as to whether absurdity or inconsistency are required and, if so, what “absurdity” in this context means.  We add to the decisions that their Honours refer to in paragraph 51, the more recent decision of the Court of Appeal decided in December last year of James Adam Pty Ltd v Fobeza Pty Ltd, but we submit ‑ ‑ ‑

EDELMAN J:   But your two submissions are not really any different, are they?  They are both submissions that one looks at context when one is determining what the ordinary meaning of words is, and sometimes context will tell you that what appears to be the ordinary meaning of words is not the meaning that ought objectively be taken to have been intended.

MR JACKMAN:   Well, your Honour has certainly picked up on the fact that it is our submission that Fitzgerald v Masters is an application of principles of construction, not a separate doctrine of judicial repair of contracts.  The difference is that the Fitzgerald v Masters’ argument begins at the point where it is accepted that the literal language is against us. 

Now, our primary argument is that we can live with the literal language because repeal and replacement fall within the concept of amendment.  But I am assuming now, and this is the difference between the two arguments, that the Court is against us on the literal language but nonetheless discerns from the objective language used a fundamental intention of the parties which is defeated by that literal language. 

EDELMAN J:   Are you talking here about a subjective intention of the parties?

MR JACKMAN:   No, that is applicable to rectification in equity.  We are confining ourselves to the intention which is objectively discernible, which, of course, emphasises the fundamental intention that the mechanism chosen in this exclusion would be one under a statute that remains in force during the life of the policy.  The question, in our submission, is whether the literal words of the contract do not give effect to the real intention of the parties discerned objectively from the contract as a whole. 

We submit that is what Fitzgerald v Masters actually decides most clearly in the reasons of the plurality, but also in the reasoning of Sir Owen Dixon and Sir Wilfred Fullagar, and it is regrettable that there is one illustrative sentence in their Honours’ judgment which has been given somewhat undue prominence over the years as confining the operation of the principle, rather than a simple question of whether the literal words have failed to give effect to the real intention of the parties discerned objectively.

Here the parties intended to refer to the Commonwealth legislation in force during the policy period, which identifies serious and highly contagious diseases and, if the literal language is against us then we rely upon that true intention for the Court to construe the exclusion in a way which would depart from the literal meaning of the language that they have chosen.

The parties have expressed themselves badly because they have referred to a legislative relic which, by definition, is no longer amenable to subsequent amendment on the assumption that underlies this argument and ‑ ‑ ‑

EDELMAN J:   Mr Jackman, this argument ultimately is one of context, is it not, that ultimately one can look to all of the circumstances to determine whether or not what you are describing as the literal words of the policy can be given a different meaning?

MR JACKMAN:   No, we put it as an argument based on text rather than context as such.

EDELMAN J:   But text does not exist without context.  It has no meaning without context.

MR JACKMAN:   Quite, I appreciate that, but the point of my response is to indicate that we are not trying to move away from a textual analysis towards something which is purely contextual.  What we are doing is arguing for a true intention objectively found in the text, which is that the exclusion should refer to the Commonwealth legislation which is in force during the policy period and the parties have expressed themselves badly in their literal language by the misnomer in the legislation.

EDELMAN J:   Do you accept that one aspect of context is that these policies only last for a year?  Is that right?

MR JACKMAN:   I think they are annual, yes.

EDELMAN J:   They last for a year.  They are enacted against a background that the Quarantine Act has been amended more than 50 times in the last 106 years and that the regulatory framework that was brought in by the Biosecurity Act was intended to be a completely different regulatory framework.

MR JACKMAN:   No, we do not accept completely different.  We say strikingly similar in relation to the way in which a list is drawn up of serious contagious diseases.  There are differences but they are not completely different and we do rely upon the very strong similarities between the two in our argument.

EDELMAN J:   I think it was described in the second reading speech as a new regulatory framework.

MR JACKMAN:   Yes, and it is, but it is not completely new.  It bears a lot of similarities with the old and on this particular point, which is the drawing up of the authoritative list or declaration of serious highly contagious diseases, the two pieces of legislation both operate with that purpose in mind and they both involve an authoritative statement of diseases by the Federal Executive.

I was going to add, if I may, that the need for special leave on this point, the Fitzgerald v Masters point, is sharpened in our submission by the fact that Justices Meagher and Ball have introduced a new restriction on what is truly a broad principle of construction, the new restriction being that it applies only to mistakes in expression, not mistakes in conception.

It is our submission that the principle does not require proof of a mistake, it simply requires the court to be satisfied that the literal language has departed from the true intention discernible from the language of the contract, but in any event there is a mistaken expression in this case, namely a misnomer of the statute, which we submit was intended to be the statute in force during the life of the policy.

Finally, at the risk of some understatement of the matter, this case does have very large ramifications for a large number of Australian businesses.  We have done our best to quantify that as a quarter of a million policies and a total amount at stake on this issue of some $10 billion and, in our submission, for that reason in addition to the questions of principle involved, we respectfully submit that special leave should be granted.  May it please the Court.

KEANE J:   Yes, Mr Sheahan.

MR SHEAHAN:   Thank you, your Honours.  This case concerned a single question of construction of materially identical language in two standard form policies of insurance.  Special leave should be refused, in summary, because the supposed special leave questions do not in truth arise on the facts of the case and because the actual decision of the Court of Appeal involved an orthodox application of principles that were uncontroversial below. 

There is an additional reason which is relevant because of the last point our learned friends made, and that is this.  The Court is required to have regard to the administration of justice in an application of this kind.  This case was determined with alacrity by the Supreme Court from commencement to a decision of five judges of the Court of Appeal within three months.  That reflected the importance of prompt determination of this issue of construction of some commercial contracts. 

It is important in particular for insureds because the determination of this question stood in the way of further progress of a large number of insurance claims and further delay in the progress of those claims to their resolution is not in the administration of justice, a consideration that is reinforced by the fact that this decision - contrary to the impression your Honours might get from Mr Hall’s affidavit and some inadmissible material in it – this decision does not resolve the question of the insurer’s liability. 

This decision resolves one answer the insurers have to the claims on the policies that they have issued.  Other questions will remain:  whether and, if so, when coverage was attracted having regard to the business, particular circumstances and its terms; if it was attracted, whether any loss was within the covered clause; if it was, how the…..clauses that are a standard feature of these business ‑ ‑ ‑

EDELMAN J:   That may be so, Mr Sheahan, but it does affect billions of dollars’ worth of policies.  It may not ultimately be determinative.

MR SHEAHAN:   So, your Honours, we do not accept that it affects billions of dollars’ worth of policies.  We say that there are many people who have the benefit of this judgment.  No one has a right to a review of a decision that affects them by this Court.  The insureds have the benefit of a decision of a strongly constituted commercial court, five judges unanimously resolving what we would submit is a vanilla question of construction.  That is where matters should be left.

EDELMAN J:   I mean, ultimately, that is what it comes down to, is this really a vanilla question of construction, or is this an ideal vehicle for the sort of Fitzgerald v Masters‑type questions that arise?

MR SHEAHAN:   I accept that, I accept that.  Now, if I can turn to that question.  The way the special leave question is formulated by the applicants is this.  What are the principles applicable to the correction of mistakes in contracts by construction - that is page 56, at line 1 of the application book. 

Now, it is not, with respect, entirely clear what point the applicants would like to make about this.  There is a discussion of what they say is the correct principle, in their written submissions, but what one does not see, one does not see or hear from our learned friends what are the two necessary additional steps in the argument.  First, can it be seen that the Court of Appeal applied a different principle from the one they contend is the correct one, and, second, can it be seen that, if they had applied what they say is the true principle, the results would have been different?  Those steps are not, in our submission, developed by the applicant, because they cannot be.  What they say the correct principle is, is in paragraph 25 of their written submissions on appeal at page 64 of the application book.  They say:

all that is necessary is a conclusion that application of the literal words of the contract would not give effect to the real intention of its makers, discerned objectively from the contract as a whole and admissible evidence of surrounding circumstances.

Put that in one word, “inconsistency” - inconsistency between objectively‑discerned intent and the meaning of the language employed.  They go on to adopt Lord Hoffmann’s dilemma, which can be paraphrased this way.  It is clear that there has been a mistake, it is clear what was objectively intended. 

Now, there was, in truth, no difference between the reasoning of the Court of Appeal in this case and the propositions that they seek to advance.  We can seek to demonstrate that by reference principally to the judgments of Justices Meagher and Ball.  They commenced their discussion at paragraph 16, application book page 20, by saying that both of the applicant’s arguments – both – rely:

on the ascertainment of the parties’ objective intention through the application of ordinary principles of construction.

Next, at application book 30 in paragraph 49, they begin their discussion of this particular subject, the Fitzgerald v Masters point, by emphasising that this question is “one of construction”:

Construing a written agreement in accordance with –

the ordinary principles that they have developed earlier in their reasons:

may reveal that its literal meaning is quite different from the meaning it was intended to bear.  The latter is to prevail.

That is the proposition for which our learned friends contend.  So, the approach in the principle that is applied by these justices…..the applicants argue.  They go on, at paragraph 53 at page 32, to say:

the application of those criteria –

I will come back to them:

should not obscure the fact that the question remains one of the ascertainment of the parties’ objective intention through the application of ordinary principles of construction.  That is not to say that the two criteria need not be satisfied.  It is rather to emphasise that they are merely steps involved in reasoning to a conclusion that by one word or phrase the parties meant something else.

Now, the two criteria their Honours are referring to are the criteria referred to on the previous page in paragraph 50 where they say:

The application of this principle is ordinarily –

I emphasise “ordinarily”:

dependent on the satisfaction of two criteria:  that the literal meaning of the language of the agreement is absurd; and that it is clear what the parties’ objective intention “is to be taken to have been” –

They develop that proposition in the next two paragraphs, and they are very important.  In 51 they make the point that the full expression is not “absurdity”, it is “absurdity or inconsistency” which is derived from the judgments of Sir Owen Dixon and Justice Fullagar in Fitzgerald v Masters.  The second limb of that expression is ignored in our learned friend’s submissions.  It is “absurdity or inconsistency”, and “inconsistency” is at the heart of what they say is the true principle and it is at the heart of what is explored by the judges in the Court of Appeal in answering the question posed ‑ ‑ ‑

EDELMAN J:   Why should any absurdity or inconsistency be required at all?  Why should not the exercise of construction simply be one that the more unlikely and the more inconsistent the literal meaning of the words, if a literal meaning could ever be given independent of context, then the less likely that meaning will be the one that objectively the parties intend it to bear?

MR SHEAHAN:   Your Honour, in a sense that is correct, with respect.  When a court is confronted with a word like “inconsistent”, it has a plain meaning, and you can see from the context that it does not mean “inconsistent”.  It means all that the parties meant was not inconsistent then some process of rationalisation, justification for reaching that conclusion as to the effect of it is necessary. 

All that is happening here, all that is happening, consistently throughout the cases and in this judgment, is the courts are looking for some clarity about a tension, call it inconsistency, between the language used and what must have been intended.  The Court of Appeal has proceeded consistently with established principle in doing what they did in this case.  It becomes more apparent, we think, in the next paragraph, 52, the top of page 32, where their Honours say:

satisfaction of the first criterion follows from satisfaction of the second.

That is to say if you establish with clarity what was intended then you will also have established that the language used is inconsistent with it or does not give effect to it, or is, by reference to what was intended, absurd.  The second question, what was the determination of what was truly intended, is the determinative question.  That is entirely consistent with our learned friend’s case. 

What their Honours go on to say is that the first criterion, whether it is expressed as “absurdity or inconsistency or clear error” or something else, whatever it is, simply reflects the fact – and this is what I was attempting to say less articulately to your Honour Justice Edelman – that the court will not lightly conclude that there has been an error, such that the contract’s language does not affect the objective intention of the parties.

EDELMAN J:   What do you then say about paragraph 34, which the applicant says is such a conclusion?

MR SHEAHAN:   Paragraph 34 is a negative proposition about the environment in which the exercise of construction occurs.  It is a negative proposition that the parties should not be taken to know that the Quarantine Act had been repealed.  The consequence of that is that the court goes through the process of construction on that footing.  It has, for reasons I will come to in a second, fatal consequences for the application of our learned friend’s attempt to apply Fitzgerald v Masters here.

Now, I just wanted to make one further point about the harmony between the reasons, in fact, developed by the Court of Appeal and my learned friend’s case.  Even Justice Hammerschlag’s reasons are consistent with them on analysis, in our respectful submission.  He did refer to absurdity as an element in the inquiry, at paragraph 123, for example, at application book 47.  In doing that he merely reflected the way the case had been argued below, as the case was put below on both sides by reference to the Fitzgerald v Masters “absurdity or inconsistency” criteria.  He went on at 124 to paraphrase the principle and did so in terms that the applicant could not criticise.  “Absurdity”, he said:

entails commercial nonsense, to the point where it is obvious that the parties did not mean what they said and obvious what they meant to say –

which is the paraphrase of Lord Hoffmann’s dictum which the applicants adopt.  If I can come back to paragraph 34 and your Honour Justice Edelman’s question.  None of this matters, no nuance of description of the relevant principle will reflect the outcome of this case for the reasons that Justices Meagher and Ball point out in their submissions.  As they said, the applicants’ case failed on a more fundamental level.

The problem is this.  We are dealing with the question of construction.  The search is for the objective intention of the parties as revealed by the terms of their contract read in the context of admissible extrinsic evidence.  Both parties are agreed, and the court proceeded on the basis that there is no reason to treat them as aware of the repeal of the Quarantine Act.  That was a problem which Justices Meagher and Ball pointed out at paragraph 55 on page 32 of the application book, about two‑thirds of the way through that paragraph.  Given that lack of awareness:

It follows that in construing the policies the Court cannot have regard to the fact of the repeal of the Quarantine Act, and there is according no basis for identifying any mistake in the parties’ language –

To use, again, Lord Hoffmann’s proposition, absent some knowledge on the part of the parties as to the repeal of the Quarantine Act, there is no footing for a conclusion that objectively something went wrong with the language. 

GLEESON J:   Mr Sheahan, as I understood Mr Jackman’s submission, it was to the effect that the parties’ objective intention was to rely on whatever was the relevant Commonwealth legislation, or whatever was the legislation that was in operation.  Does that rely on anything other than the reference to the Quarantine Act and subsequent amendments?

MR SHEAHAN:   Apparently not, your Honour.  It is, with respect, a plain case of bootstrapping.  What our learned friends say is, by the use of the words “and subsequent amendments”, it is plain that some level of ambulatory effect was intended to be given by the parties to this legislative framework.  Therefore, a maximum amount of ambulatory effect should be taken to have been intended by the parties – therefore. 

Now, it is that second step in the argument that has no basis.  If we were to stand back from this and ask, ex ante, questions about the likely commercial purposes of this exclusion, even focusing just on the position of the insurers, it is not at all obvious what their answer would be if asked this question:  “You have underwritten these policies on the basis of the Quarantine Act and its listed diseases and set the premium accordingly.  If the government were to wholly repeal the Quarantine Act and replace it with a new scheme of regulation, touching on the same matters but using different mechanisms, would you prefer for the term of this policy to have your exclusion clause operate by reference to whatever the government’s new dispensation was, or rather by reference to the Quarantine Act list of quarantinable diseases on the basis of which you did your underwriting?”  Now, the answer to that question is unknowable.  Of course, one does not approach this question of the commercial purpose of the clause simply by reference to the position of the insurers.

EDELMAN J:   The answer to your question might be readily given if it were, say, a 30‑year policy.

MR SHEAHAN:   It would be a completely different state of affairs.

KEANE J:   But on any view it is very hard to read the words of the policy as if they said, “any declaration under any regime adopted by the Commonwealth Parliament from time to time”.

MR SHEAHAN:   Precisely, your Honour, and on the question of construction, stripping away false issues, always speaking in connotation and denotation and so on, on the question of construction, Justices Meagher and Ball distinctly find that the ordinary meaning of the expression “and subsequent amendments” does not encompass, in reference to a known statute, wholesale repeal and replacement.

A finding as to the ordinary meaning of language is a factual finding.  One does not come to this Court to challenge a finding of that kind, particularly when it appears in a judgment of the unanimous Court of Appeal in a case of this kind.

Your Honours, all the cases of correction of construction on which our learned friends rely, particularly those in paragraph 27, depend upon looking to extrinsic evidence or intrinsic evidence to identify the plain meaning – the plain intent of the…..  Can I just give your Honours this reference.  In…..Lord Denning used some language of Lord Devlin to describe the test.  He said:  “The test must be how would a reasonable man receiving the document take it?  If, in all the circumstances of the case, and looking at the document as a whole he was to say to himself, of course, it must mean me, but they’ve got my name wrong, that’s a case of misnomer” and then the court can treat the contract as if it had used the correct name. 

But that is precisely what cannot occur here for the reasons that Justices Meagher and Ball gave and neither the insurer nor the insured, confronted with the text of this policy, could say where it said Quarantine Act, quarantinable diseases declared under the Quarantine Act, it plainly means human diseases determined under the Biosecurity Act because they did not have that knowledge and that is they have removed the rug from any application of the Fitzgerald v Masters principle in this case.  Those are our submissions, your Honour.

KEANE J:   Yes, Mr Jackman, anything in reply?

MR JACKMAN:   Can I deal first with the question about urgency and delay that my learned friend relied upon.  There are other questions which arise on these and other business interruption policies, but they are questions which remain only if we lose on the point at issue in this case.  There is a second set of test cases which is listed to be heard in the Federal Court in September, with the contemplation that any appeal will be held in November.  So that if we lose on a point at issue in these proceedings, then those other issues are going to be considered by the Full Court in the latter part of this year with a view to a final judgment from a Full Court early next year.

Second, on the question of whether the Court of Appeal applied the correct principle, can I ask your Honours to go to page 32 of the application book.  Paragraph 53 contains one of the many statements to the effect that the question is one of discerning the parties’ objective intention through ordinary principles of construction.  But their Honours go on to say:

That is not to say that the two criteria need not be satisfied. 

They are the two criteria back in paragraph 50, namely that there is an absurdity and it is clear what the objective intention is taken to have been.  So that is an overlay on ordinary principles of construction.  Then, in paragraph 54, which my learned friend did not go to, their Honours in the last sentence express themselves in terms of their ultimate conclusion that the result:

could hardly be said to be absurd.

That is, their Honours were applying a principle of absurdity, not simply ordinary principles of construction and, similarly, if your Honours go to Justice Hammerschlag’s judgment at page 48 of the application book ‑ ‑ ‑

EDELMAN J:   Sorry, just before we do, do you accept the sentence preceding the final sentence in 54 – the two sentences preceding?

MR JACKMAN:  

The repeal of the Quarantine Act did not affect the list of diseases declared under it at the time of its repeal, and the exclusion is still able to operate by reference to that list.

Yes, we accept that, and then:

over time the exclusion would fall short of its apparent purpose –

Well, that is true enough, but it does not give full ambit, we submit, to the true intention of the parties which was to pick up the federal mechanism for listing diseases operative during the period of the policy.  To complete the point I was on, at paragraph 127 on page 48, Justice Hammerschlag concludes the paragraph by saying:

what they did agree is not a clear mistake and, if it is, it does not rise to the level of absurdity.

So, the case was decided on the basis of whether there was an absurdity, not on the basis of whether the true intention of the parties was not reflected in the literal language and, therefore, there should be a departure from the literal language. 

In answer to my learned friend’s references to “extrinsic evidence”, we do not rely upon extrinsic evidence.  We rely upon the policy language as evincing a true intention, which is not reflected in the literal language which was adopted, applying the principle which we say the plurality in Fitzgerald v Masters clearly expressed, and which is found similarly in the statement of principle by Lord Justice Knight Bruce in paragraph 24 of our written submissions that there are cases where the true intention of the parties is not reflected in the literal language and the court therefore construes the writing in accordance with the true intention, rather than the…..literal meaning.  May it please the Court.

KEANE J:   Thanks, Mr Jackman.  The Court will retire from the Bench for a moment to discuss the course it will take in this matter.

AT 12.23 PM SHORT ADJOURNMENT

UPON RESUMING AT 12.24 PM:

KEANE J:   The decision of the Court of Appeal of the Supreme Court of New South Wales is not attended by sufficient doubt to warrant the grant of special leave to appeal.  The application should be dismissed with costs.

Adjourn the Court to 3.30 pm on Monday, 2 August in Canberra.

AT 12.25 PM THE MATTER WAS CONCLUDED