Quintis Ltd (Subject to Deed of Company Arrangement) v Certain Underwriters at Lloyd's London Subscribing to Policy Number B0507N16FA15350

In the Federal Court of Australia, Quintis Ltd, which was under a deed of company arrangement, sought to recover amounts under four directors and officers' liability insurance policies, issued by certain underwriters at Lloyd's London. The dispute centred on the amount of cover for the "Entity Securities Liability Optional Extension" (Side C cover). Quintis claimed that the Side C cover was not sub-limited to the primary policy and that the policies should be rectified to reflect up to $50 million in Side C cover. The case involved various legal issues, including the construction of the insurance policies, the principles applicable to rectification, and the standard of proof required for a successful rectification claim.

The court examined the interaction between the primary and excess policies, distinguishing between construction and rectification. It held that the contra proferentem rule, which favours the insured in ambiguous contracts, was not the only rule of contractual construction and should only be applied when ambiguity remained after all other avenues of construction had been exhausted. The court found no ambiguity in the policies and rejected Quintis' argument that the policies should be rectified to reflect up to $50 million in Side C cover. It found that the common intention of the parties was not to provide such cover, and there was no basis for rectification. The court also held that extrinsic material could not be used to contradict the clear terms of the policies.

The court concluded that on their proper construction, the 2016-17 Policies did not provide Side C cover of up to $50 million. It found that the rectification claim failed because there was no common intention between the parties to provide such cover, and the standard of proof for rectification was not met. The court held that rectification should not be granted if it would have a significant impact on third-party rights, and there was no evidence of a mutual mistake or common intention to the contrary.

The court made several orders, including requiring Quintis and the Relevant Insurers to file written submissions on the issues of relief and costs, and providing an opportunity for oral submissions if requested. The court also noted that the settlement approval application in the two class actions in which Quintis was a party had been adjourned, and the proceeding against the insurers was commenced against the background of a potential settlement of those class actions. The orders were made under Rule 39.32 of the Federal Court Rules 2011.