Zurich Australian Insurance Limited v CIMIC Group Limited

[2024] NSWCA 229

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Zurich Australian Insurance Limited v CIMIC Group Limited & Ors [2024] NSWCA 229

Hearing dates:

19-22 September 2023

Date of orders:

18 September 2024

Decision date:

18 September 2024

Before:

White JA, Stern JA and Griffiths AJA

Decision:

(1)   Zurich Appeal (2022/00334409)

(a)   Zurich’s appeal allowed in part.

(b)   CIMIC’s cross-appeal dismissed.

(c)   AIG’s cross-appeal dismissed.

(2)   Berkley Appeal (2022/00334264)

(a)   Berkley’s appeal allowed.

(b)   CIMIC’s cross-appeal dismissed.

(3)   Arch/Dual Appeal (2022/00335502)

(a)   Arch/Dual’s appeal allowed.

(4)   Chubb Appeal (2022/00336236)

(a)   Chubb’s appeal dismissed.

(5)   Set aside Orders 9, 10, 11 and 13 made on 12 October 2022 and Orders 7 and 8 made on 23 June 2023.

(6)   In lieu thereof order that:

(a)   Subject to the relief granted by Orders 2 to 5 made on 12 October 2022 and Orders 1-6 and 9 made on 23 June 2023, CIMIC’s further amended summons dismissed with costs.

(b)   AIG’s first cross-claim against Berkley dismissed with costs.

(7)   Within 28 days hereof the parties provide the Court with consent orders as to the costs of the proceedings in this Court, to the extent agreement has been reached.

(8)   To the extent agreement as to the costs of the appeals, cross-appeals, and notices of contention has not been reached, within 28 days hereof the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party’s submissions on the matters in contention concerning costs. The issues of costs will, subject to any contrary order, be dealt with on the papers and without a further hearing.

Catchwords:

INSURANCE – Insurance Contracts Act 1984 (Cth) – non-disclosure and misrepresentation – duty of disclosure – where senior executive of Leighton made a file note in November 2010 detailing conversations with another senior executive (“Iraq File Note”) – where that executive advised he had an opportunity to extend/vary a contract for a major infrastructure project in Iraq but it would require payment to a third party nominated subcontractor of $50-$60 million where the real value of the work was less than 50% of the payment, and that the current contract was won by a payment to a nominated subcontractor “on the same terms” – where Iraq File Note not disclosed to insurers for 2011 year (“2011 Insurers”) – where Leighton subsequently entered into primary and excess layers of D&O Insurance for the 2011 year (“2011 Policies”) – whether Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act and made a misrepresentation to the 2011 Insurers

INSURANCE – Insurance Contracts Act 1984 (Cth) – whether the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act

INSURANCE – Liability insurance – directors and officers – whether cll 5.3 and 7.1 of the 2011 Policy precluded the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act – whether cl 5.3(ii) of the 2011 Policy operated so that limit of liability under previous years policy (as reduced by amounts previously paid) applied to CIMIC’s claims

INSURANCE – Insurance Contracts Act 1984 (Cth) – contribution – whether AIG entitled to equitable contribution of 50% from Berkley and Swiss Re – where, without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley – whether an omission to form an expectation that a claim could arise is a relevant omission for the purposes of s 54 of the Insurance Contracts Act

INSURANCE – Liability insurance – directors and officers – where primary judge granted declaratory relief against insurers for the 2010 year – whether Court had jurisdiction to grant declaratory relief or alternatively whether the exercise of jurisdiction to grant declaratory relief miscarried

APPEALS – Procedural fairness – whether primary judge denied Berkley procedural fairness in limiting its cross-examination of two witnesses

Legislation Cited:

Australian Securities and Investments Commission Act 2001 (Cth), s 33

Bankruptcy Act 1966 (Cth)

Commonwealth Constitution, Ch III, s 76(ii)

Corporations Act 2001 (Cth), ss 9, 181, 184, 1307

Corrections Management Act 2007 (ACT)

Corrective Services Regulation 1989 (Qld), s 13(2)

Evidence Act 1995 (NSW), ss 69, 136, 140

Foreign Corrupt Practices Act, 15 USC §§ 78dd-1 (1977)

Insurance Contracts Act 1984 (Cth), ss 21, 27AA, 28, 40, 51(1), 54, 57

Judiciary Act 1903 (Cth), s 39(2)

Limitation Act 1969 (NSW), s 14(1)(a)

Migration Act 1958 (Cth), ss 417, 485

Supreme Court Act 1970 (NSW), ss 63, 75

Cases Cited:

Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10

Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342; [1969] HCA 55

All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782

Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294

Antico v Heath Fielding Australia Pty Limited (1997) 188 CLR 652; [1997] HCA 35

Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406

Aussie Tax Pty Ltd v Markel Capital Limited [2008] VSC 592

Australian Broadcasting Corporation v Wing (2019) 271 FCR 632; [2019] FCAFC 125

Australian Hospital Care Pty Ltd v Swinbank (Court of Appeal (Qld), 9 July 1999, unrep)

Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17

Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751

Avant Insurance Ltd v Burnie [2021] NSWCA 272

AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26; (2023) 97 ALJR 674

Bartz v Department of Corrective Services [2000] QSC 336

Bass v Permanent Trustee Company Limited (1999) 198 CLR 334; [1999] HCA 9

Blair v Curran (1939) 62 CLR 464; [1939] HCA 23

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833

Brighton Ceiling Pty Ltd v Pocrnja [2005] NSWCA 175

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Brotherton v Aseguradora Colseguros SA (No 2) [2003] EWCA Civ 705; [2003] 2 All ER (Comm) 298

Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212

Cabal v United Mexican States (2001) 108 FCR 311; [2001] FCA 427

Caledonia North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123

Cantone v Insurance Australia Limited [2022] FCA 1009

CGU Insurance Limited v Blakeley (2016) 259 CLR 339; [2016] HCA 2

CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30

Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7

CIMIC Group Limited v AIG Australia Limited (No 2) [2023] NSWSC 640

Commercial Union Assurance Co of Australia Ltd v Beard (1999) 47 NSWLR 735; [1999] NSWCA 422

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Edwards v Santos Limited (2011) 242 CLR 421; [2011] HCA 8

ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24

FAI General Insurance Co Limited v Australian Hospital Care Pty Limited (2001) 204 CLR 641; [2001] HCA 38

FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (1999) 153 FLR 448

Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12

Forster v Jododex Australia Pty Limited (1972) 127 CLR 421; [1972] HCA 61

Galaxy Communications Pty Ltd v Paramount Films of Australia Inc [1998] NSWCA 89

GIO General Limited v Wallace [2001] NSWCA 299

Gregg v R [2020] NSWCCA 245

Gregory v Philip Morris Ltd (1988) 80 ALR 455

HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6; [2003] 1 All ER (Comm) 349

HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31

Hobart International Airport Pty Ltd v Clarence City Council (2022) 276 CLR 519; [2022] HCA 5

House v The King (1936) 55 CLR 499; [1936] HCA 40

Inversiones Manria S.A. v Sphere Drake Insurance Co. Plc. (The ‘Dora’) [1989] 1 Lloyd’s Rep 69

Islam v Director-General, Justice and Community Safety Directorate [2022] ACTSC 124

Jennings v Wilden [2023] NSWCA 41

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Khoury v Government Insurance Office of New South Wales (1984) 165 CLR 622; [1984] HCA 55

Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25

Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207

Lohar Corporation Pty Ltd v Dibu Pty Ltd (1975) 1 BPR 9177

Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19

Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172

Macteldir Pty Limited v Dimovski [2005] FCA 1528

Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062

Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32

Maxwell v Highway Hauliers Pty Ltd (2014) 252 CLR 590; [2014] HCA 33

Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500

Minister for Immigration and Multicultural Affairs v Ozmanian (1996) 71 FCR 1

Moltoni Corporation Pty Limited v QBE Insurance Limited (2001) 205 CLR 149; [2001] HCA 73

Murphy v Abi-Saab (1995) 37 NSWLR 280

National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170

Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286; [1974] HCA 18

Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222

Onley v Catlin Syndicate Ltd as the Underwriting Member of Lloyd’s Syndicate 2003 [2018] FCAFC 119

Palmer v Ayres (2017) 259 CLR 478; [2017] HCA 5

Permanent Trustee Australia Limited v FAI General Insurance Company Limited (in liq) (2003) 214 CLR 514; [2003] HCA 25

Plaintiff M61/2010E v The Commonwealth of Australia (2010) 243 CLR 319; [2010] HCA 41

Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252

Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2014] NSWCA 440

QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd (2009) 24 VR 326; [2009] VSCA 124

R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141; [1945] HCA 50

Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183

Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679

Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88

Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73

Stealth Enterprises Pty Ltd t/as The Gentlemen’s Club v Calliden Insurance Limited [2017] NSWCA 71

Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The ‘Grecia Express’) [2002] EWHC 203 (Comm); [2002] 2 All ER (Comm) 213

Tosich v Tasman Investment Management Limited [2008] FCA 377

Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170

Unions NSW v New South Wales [2023] HCA 4; (2023) 97 ALJR 150

Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (Liability Judgment) [2023] FCA 190

Viterra Malt Pty Ltd v Cargill Australia Limited [2023] VSCA 157

Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9

Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71

Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd (2016) 244 FCR 5; [2016] FCAFC 150

Yarrabee Coal Company Pty Ltd v Lujans [2009] NSWCA 85

Texts Cited:

Insurance Contracts Bill 1984 (Cth)

JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies (5th ed, 2014, Butterworths)

Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press)

RS French, “Declarations – Homer Simpson’s Remedy – is there anything they cannot do?” (2007) Federal Judicial Scholarship 24

Category:

Principal judgment

Parties:

Zurich Appeal (2022/334409)
Zurich Australian Insurance Limited (Appellant)
CIMIC Group Limited (First Respondent)
AIG Australia Limited (Second Respondent)
Chubb Insurance Australia Limited (Third Respondent)
Catlin Syndicate Limited (Fourth Respondent)
Catlin Australia Pty Limited (Fifth Respondent)
Liberty Mutual Insurance Company (Sixth Respondent)
Berkley Insurance Company (Seventh Respondent)
Swiss Re International SE (Eighth Respondent)
Arch Underwriting at Lloyd’s Limited on Behalf of Syndicate 2012 (Ninth Respondent)
Dual Australia Pty Ltd (Tenth Respondent)

Berkley Appeal (2022/334264)
Berkley Insurance Company (Appellant/First Cross-Respondent)
CIMIC Group Limited (First Respondent/First Cross-Appellant)
AIG Australia Limited (Second Respondent/Third Cross-Respondent)
Chubb Insurance Australia Limited (Third Respondent/Second Cross-Respondent)
Catlin Syndicate Limited (Fourth Respondent)
Catlin Australia Pty Limited (Fifth Respondent/Fourth Cross-Respondent)
Liberty Mutual Insurance Company (Sixth Respondent/Sixth Cross-Respondent)
Zurich Australian Insurance Limited (Seventh Respondent/Eighth Cross-Respondent)
Swiss Re International SE (Eighth Respondent/Seventh Cross-Respondent)
Arch Underwriting at Lloyd’s Limited on Behalf of Syndicate 2012 (Ninth Respondent/Ninth Cross-Respondent)
Dual Australia Pty Ltd (Tenth Respondent/Tenth Cross-Respondent)

Arch/Dual Appeal (2022/335502)
Arch Underwriting at Lloyd’s Limited on Behalf of Syndicate 2012 (First and Second Appellants)
Dual Australia Pty Ltd (Second Appellant)
CIMIC Group Limited (First Respondent)
AIG Australia Limited (Second Respondent)
Chubb Insurance Australia Limited (Third Respondent)
Catlin Syndicate Limited (Fourth Respondent)
Catlin Australia Pty Limited (Fifth Respondent)
Liberty Mutual Insurance Company (Sixth Respondent)
Berkley Insurance Company (Seventh Respondent)
Swiss Re International SE (Eighth Respondent)
Zurich Australian Insurance Limited (Ninth Respondent)

Chubb Appeal (2022/336236)
Chubb Insurance Australia Limited (Appellant)
CIMIC Group Limited (First Respondent)
AIG Australia Limited (Second Respondent)
Catlin Syndicate Limited (Third Respondent)
Catlin Australia Pty Limited (Fourth Respondent)
Liberty Mutual Insurance Company (Fifth Respondent)
Berkley Insurance Company (Sixth Respondent)
Swiss Re International SE (Seventh Respondent)
Zurich Australian Insurance Limited (Eighth Respondent)
Arch Underwriting at Lloyd’s Limited on Behalf of Syndicate 2012 (Ninth Respondent)
Dual Australia Pty Ltd (Tenth Respondent)

Representation:

Counsel:

Zurich Appeal (2022/334409)
R Dick SC and S Fitzpatrick (Appellant)
M Jones SC and B Ryde (First Respondent)
G Rich SC and E Bathurst (Second Respondent)
S Donaldson SC and K Lindeman (Third Respondent)
I R Pike SC and M F Newton (Fourth and Fifth Respondents)
M Elliot SC and L Hulmes (Sixth Respondent)
B Walker SC and M A Friedgut (Seventh Respondent)
E C Muston SC and H Mann (Eighth Respondent)
A Horvath SC and M Caristo (Ninth and Tenth Respondents)

Berkley Appeal (2022/334264)
B Walker SC and M A Friedgut (Appellant/First Cross-Respondent)
M Jones SC and B Ryde (First Respondent/First Cross-Appellant)
G Rich SC and E Bathurst (Second Respondent/Third Cross-Respondent)
S Donaldson SC and K Lindeman (Third Respondent/Second Cross-Respondent)
I R Pike SC and M F Newton (Fourth Respondent and Fifth Respondent/Fourth Cross-Respondent)
M Elliot SC and L Hulmes (Sixth Respondent/Sixth Cross-Respondent)
R Dick SC and S Fitzpatrick (Seventh Respondent/Eighth Cross-Respondent)
E C Muston SC and H Mann (Eighth Respondent/Seventh Cross-Respondent)
A Horvath SC and M Caristo (Ninth Respondent/Ninth Cross-Respondent and Tenth Respondent/Tenth Cross-Respondent)

Arch/Dual Appeal (2022/335502)
A Horvath SC and M Caristo (First and Second Appellants)
M Jones SC and B Ryde (First Respondent)
G Rich SC and E Bathurst (Second Respondent)
S Donaldson SC and K Lindeman (Third Respondent)
I R Pike SC and M F Newton (Fourth and Fifth Respondents)
M Elliot SC and L Hulmes (Sixth Respondent)
B Walker SC and M A Friedgut (Seventh Respondent)
E C Muston SC and H Mann (Eighth Respondent)
R Dick SC and S Fitzpatrick (Ninth Respondent)

Chubb Appeal (2022/336236)
S Donaldson SC and K Lindeman (Appellant)
M Jones SC and B Ryde (First Respondent)
G Rich SC and E Bathurst (Second Respondent)
I R Pike SC and M F Newton (Third and Fourth Respondents)
M Elliot SC and L Hulmes (Fifth Respondent)
B Walker SC and M A Friedgut (Sixth Respondent)
E C Muston SC and H Mann (Seventh Respondent)
R Dick SC and S Fitzpatrick (Eighth Respondent)
A Horvath SC and M Caristo (Ninth and Tenth Respondents)

Solicitors:

Zurich Appeal (2022/334409)
YPOL Lawyers (Appellant)
Allens (First Respondent)
Wotton & Kearney (Second Respondent)
Lander & Rogers (Third Respondent)
DLA Piper (Fourth and Fifth Respondents)
Colin Biggers & Paisley (Sixth Respondent)
Mills Oakley (Seventh Respondent)
Kennedys (Eighth Respondent)
Moray & Agnew (Ninth and Tenth Respondents)

Berkley Appeal (2022/334264)
Mills Oakley (Appellant/First Cross-Respondent)
Allens (First Respondent/First Cross-Appellant)
Wotton & Kearney (Second Respondent/Third Cross-Respondent)
Lander & Rogers (Third Respondent/Second Cross-Respondent)
DLA Piper (Fourth Respondent and Fifth Respondent/Fourth Cross-Respondent)
Colin Biggers & Paisley (Sixth Respondent/Sixth Cross-Respondent)
YPOL Lawyers (Seventh Respondent/Eighth Cross-Respondent)
Kennedys (Eighth Respondent/Seventh Cross-Respondent)
Moray & Agnew (Ninth Respondent/Ninth Cross-Respondent and Tenth Respondent/Tenth Cross-Respondent)

Arch/Dual Appeal (2022/335502)
Moray & Agnew (First and Second Appellants)
Allens (First Respondent)
Wotton & Kearney (Second Respondent)
Lander & Rogers (Third Respondent)
DLA Piper (Fourth and Fifth Respondents)
Colin Biggers & Paisley (Sixth Respondent)
Mills Oakley (Seventh Respondent)
Kennedys (Eighth Respondent)
YPOL Lawyers (Ninth Respondent)

Chubb Appeal (2022/336236)
Lander & Rogers (Appellant)
Allens (First Respondent)
Wotton & Kearney (Second Respondent)
DLA Piper (Third and Fourth Respondents)
Colin Biggers & Paisley (Fifth Respondent)
Mills Oakley (Sixth Respondent)
Kennedys (Seventh Respondent)
YPOL Lawyers (Eighth Respondent)
Moray & Agnew (Ninth and Tenth Respondents)

File Number(s):

2022/334409; 2022/334264; 2022/335502; 2022/336236

Publication restriction:

Nil.

 Decision under appeal 

Court or tribunal:

Supreme Court of NSW

Jurisdiction:

Equity

Citation:

[2022] NSWSC 999

Date of Decision:

27 July 2022

Before:

Peden J

File Number(s):

2020/00172061

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 30 March 2010 Leighton Offshore Pte Ltd (“Leighton Offshore”), a subsidiary of Leighton Holdings Limited (“Leighton”, now known as CIMIC Group Limited (“CIMIC”)), submitted a bid for a large infrastructure project known as the Iraq Phase 1 Project. On 7 April 2010 Russell Waugh (Chief Executive Officer (“CEO”) of Leighton Offshore) met Peter Willimont of Unaoil Ltd (“Unaoil”). Mr Willimont wanted to know if Leighton Offshore was interested in a “package proposal” for the Iraq Phase 1 Project onshore works. Mr Waugh told Mr Willimont that Leighton Offshore was interested but that it “had to be commercially attractive”.

On 26 May 2010 Mr Waugh met with Mr Willimont in Perth. Later that day, Mr Waugh asked an employee of Leighton Offshore to urgently prepare an updated green sheet outlining a proposed bid. The green sheet was updated, with the bid price increased by a little over US$65 million. A division of Leighton Offshore and Unaoil entered into a Memorandum of Understanding (“MOU”) dated 31 May 2010, by which Leighton and Unaoil agreed a subcontract concerning “Onshore Works” as defined in the MOU for an “all inclusive” price of US$65 million. The MOU also included a term that Leighton pay liquidated damages to Unaoil, in the event Leighton was awarded the contract for the Iraq Phase 1 Project but did not award a subcontract to Unaoil. On 22 June 2010 Leighton Offshore submitted its revised fixed sum bid price for the Iraq Phase 1 Project. Thereafter, Leighton and Unaoil signed a Memorandum of Agreement (“MOA”) and a Supplementary Agreement increasing both the subcontract and liquidated damages amounts.

Emails indicated that Unaoil had some kind of relationship with Oday Al Quoraishi (“Mr Oday”). Mr Oday was the Project Manager for the Iraq Phase 1 Project, working for the Iraqi entity which invited Leighton to bid for that project. There is some material which may suggest that Unaoil was paying money to Mr Oday to act in Unaoil’s interests.

On 23 October 2010 Leighton Offshore entered into a US$733 million contract with Southern Oil Company (“SOC”) for the Iraq Phase 1 Project (“Iraq Phase 1 Contract”). SOC was a subsidiary of the Iraq National Oil Company. Leighton Offshore entered into a subcontract agreement with Unaoil on 8 December 2010 in respect of the Iraq Phase 1 Project. On 1 November 2010 invitations were issued to bid for the Iraq Phase 3 Project.

On 23 November 2010 David Stewart (a Chief Operating Officer (“COO”) of Leighton and later CEO of Leighton) had two conversations with David Savage (a COO of Leighton). Mr Stewart made a file note during and shortly following these conversations which recorded that Mr Savage had advised that he had an opportunity to negotiate an extension/variation to the current contract in Iraq but that it would require a payment to a third party nominated subcontractor who would do all onshore works, that that payment was $50-$60 million but the real value of the work was less than 50% of the payment, and that the current $720 million contract was won by an $87 million payment to a nominated subcontractor “on the same terms” (“Iraq File Note”). The Iraq File Note also recorded that Mr Stewart said that this was “exactly what got the [Australian Wheat Board] into trouble”, and that Mr Stewart said he would talk to Wallace King (then Leighton CEO) and Mr Savage said “no”. The Iraq File Note recorded that Mr Stewart, having discussed with matter with William Wild (a COO and later deputy CEO of Leighton), told Mr Savage that he was not comfortable with the arrangements and that if he couldn’t win without them then Leighton didn’t want the work. On 18 April 2011 Leighton Offshore submitted its bid for the Iraq Phase 3 Project. On 13 October 2011 it was awarded the contract (“Iraq Phase 3 Contract”).

In the financial year commencing 30 June 2010 (“2010 year”) Leighton had a primary layer of Directors’ and Officers’ Liability and Company Security (“D&O”) Insurance with AIG (“2010 Primary Policy”) and excess layers with, relevantly Chubb, Liberty, Berkley, Swiss Re, Zurich and Arch/Dual (“2010 Excess Policies”, together “2010 Policies” and “2010 Insurers”). Leighton did not make any notification of the matters identified in the Iraq File Note, or of a possible loss, to the 2010 Insurers, nor make any claim under the 2010 Policies.

In May 2011 Leighton submitted a proposal form (“2011 Proposal”) for D&O Insurance for the financial year commencing 30 June 2011 (“2011 year”). Leighton did not disclose the existence of the Iraq File Note, or any of its contents, in the 2011 Proposal. Leighton subsequently entered into a primary layer of D&O Insurance, insured as to 50% by each of AIG and Chubb (“2011 Primary Policy”), and excess layers with Catlin and Liberty (“2011 Excess Policies”, together “2011 Policies” and “2011 Insurers”) for the 2011 year.

In early-November 2011 the Iraq File Note was discovered by Leighton’s external solicitors. On 7 November 2011 Leighton referred the Iraq File Note to the Australian Federal Police (“AFP”). On 13 February 2012, Leighton issued an ASX Media Release. On 22 February 2012 Leighton notified the 2011 Insurers of a possible loss under the 2011 Policies (“2012 Notification”). CIMIC subsequently claimed various losses under the 2011 Policies, including in relation to the AFP investigation, separate ASIC investigations, and costs incurred in connection with the investigation, defence and settlement of various representative proceedings arising out of an alleged failure to disclose the Iraq File Note (“Companies Securities Claims”).

CIMIC brought proceedings against both the 2010 and 2011 Insurers. Only declaratory relief was sought against the 2010 Insurers, but the 2011 Insurers were sued under the 2011 Policies. The 2011 Insurers sought equitable contribution from the 2010 Insurers. By orders made on 12 October 2022 (the “Orders”) the primary judge dismissed claims made by CIMIC against Catlin and Liberty, upheld a cross-claim for equitable contribution by AIG against Berkley and dismissed a cross-claim for equitable contribution by AIG against Swiss Re.

The primary judge also made several declarations including that the 2011 Insurers were not liable to indemnify CIMIC for the Company Securities Claims and that the 2011 Primary Insurers were each severally liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy in respect of the AFP Investigation Costs and the ASIC Iraq Investigation Costs (“Investigation Costs”). The primary judge also granted declaratory relief against the 2010 Insurers, albeit not in the form originally sought by CIMIC (“2010 Declaration”).

Zurich, Berkley, Arch/Dual and Chubb appeal and CIMIC and AIG cross-appeal against various aspects of the Orders. By way of notices of contention filed in these various appeals, AIG, Catlin, Liberty and Chubb seek to affirm various of the Orders on further grounds.

The issues arising on the appeals as set out in the Agreed List of Issues were:

1. Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act 1984 (Cth)?

2. Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy’s limit of liability (as reduced by amounts previously paid) applies to CIMIC’s claims?

3. What is the proper construction of cl 3.2(i) of the 2011 Primary Policy?

4. What is the proper construction of cl 5.1 of the 2010 Primary Policy?

5. If cl 5.1 is to be construed as contended for by Berkley, on the primary judge’s findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy?

6. Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers?

7. Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act?

8. Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers, the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful? That issue contains the following sub-issues:

   (a)   Should the primary judge have found that the representations recorded in the Iraq File Note were true?

   (b)   Did the primary judge err in concluding that there was insufficient evidence of “corrupt payments to win the Iraq work”?

   (c)   Did the primary judge err in relying upon the transcript of Mr Savage’s compulsory ASIC examination in the manner described at J[262]?

   (d)   Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful?

   (e)   Did the primary judge err in concluding there was “no evidence” that Unaoil paid money to the SOC or that Leighton was aware of Unaoil’s retainer of Mr Oday?

   (f)   Did the primary judge err in concluding that the arrangements between Leighton and Unaoil provided Leighton with “commercially justifiable advantages”?

   (g)   Did the primary judge err in failing to find that the purpose of the liquidated damages clause agreed between Leighton and Unaoil was to ensure Unaoil (erroneously written as Leighton in the Agreed List of Issues) was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract?

   (h)   Did the primary judge err in concluding that no part of the US$65 million increase in Leighton’s revised tender price had not been demonstrated to directly relate to improper payments?

9. Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified of the Iraq File Note under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified under cl 5.1 and/or s 40(3):

   (a)   of the existence or occurrence of the facts recorded in the Iraq File Note and/or that CIMIC and/or Mr Savage reasonably believed or believed that those facts existed or had occurred;

   (b)   that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, won a US$733 million contract in Iraq by paying a subcontractor about US$87 million, which was more than twice the real value of the work being performed by that subcontractor;

   (c)   that Leighton Offshore had, and/or CIMIC and/or Mr Savage reasonably believed or believed that Leighton Offshore had, an opportunity to negotiate a US$500 million extension to the Iraq Phase 1 Contract, but in order to win that extension it would be required to pay US$50 to 60 million to the same subcontractor, which was more than twice the real value of the work to be performed by that subcontractor; and

   (d)   that the payment and proposed payment to the subcontractor were unlawful or may be unlawful and/or that CIMIC and/or Mr Savage reasonably believed or believed that to be the case?

10. Did the primary judge err in identifying the retention applicable to CIMIC’s claim against the 2011 Insurers?

11. Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re?

12. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers based on the pleadings against them?

13. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact?

14. Did the primary judge err in making the 2010 Declaration against Arch and Dual based on her Honour’s findings and the failure to deal with the submission summarised at J[623]?

15. Did the primary judge err in making the 2010 Declaration against the 2010 Insurers on the grounds that the 2010 Declaration was hypothetical, lacked utility (including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late for it to do so), was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy?

16. Did the primary judge err in exercising the costs discretion?

Berkley also raised an issue whether it was denied procedural fairness by the primary judge’s rulings, which limited its cross-examination of two of CIMIC’s witnesses.

The Court (White JA, Stern JA and Griffiths AJA) held, allowing the Zurich Appeal in part, allowing the Berkley Appeal and the Arch/Dual Appeal, dismissing the Chubb Appeal, dismissing each of CIMIC’s cross-appeals and dismissing AIG’s cross-appeal:

The Court found it convenient to address the Issues in a different order, which is reflected in the following summary of the Court’s reasoning and findings on the Issues. When reference is made generally to the relevant policies in a year, we refer to eg 2010 Policy/Policies and 2011 Policy/Policies. Where we refer to terms (capitalised) that are defined in the policies, we refer to the term as defined in that policy.

As to Issue (6)

1. There was no error in the primary judge’s finding that the 2011 Insurers should succeed in their defence relying upon s 21 of the Insurance Contracts Act. The evidence supports a conclusion that the matters identified in the Iraq File Note were both known to Leighton, and that a reasonable person in Leighton’s circumstances would have known (not merely strongly suspected or believed) that those matters would be relevant to whether an insurer under a proposed D&O policy would accept the risk and if so on what terms: [150]-[151].

2. The primary judge’s finding as to the materiality of the matters identified in the Iraq File Note was also correct. The question under s 21(1)(b), is whether a reasonable person in the position of Leighton could be expected to know the matter (known to Leighton) to be a matter relevant to the decision of the insurer whether to accept the risk, and if so on what terms. Matters of relevance for the purposes of this enquiry include the nature of the insurance cover sought, the fact Leighton was a large public Australian company with disclosure obligations to both regulators and to the market and the 2011 Proposal which included a direction that enquiries should be made of all appropriate staff. These matters support a conclusion that the matters identified in the Iraq File Note ought to have been disclosed to the 2011 Insurers under s 21: [152]-[153].

   Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252, considered.

3. The primary judge did not err in finding that Leighton made an actionable misrepresentation in the 2011 Proposal. CIMIC’s submissions as to this were derivative from its submissions as to non-disclosure under s 21. Its failure to show that the primary judge erred as regards s 21 necessarily means that its contention that the primary judge erred in finding a misrepresentation is also rejected: [182].

As to Issue (7)

1. The question whether each of the 2011 Insurers proved, on the balance of probabilities, what would have happened had the matters identified in the Iraq File Note been disclosed prior to the inception date for the 2011 Policies, being 30 June 2011, depends upon an assessment of the affidavit and oral evidence relied upon by the 2011 Insurers in the overarching factual context. This includes the evidence of what occurred in June 2012 after the 2012 Notification, the character of the matters identified in the Iraq File Note and the objective probabilities having regard to the factual circumstances. Those matters strongly support the conclusion that the 2011 Insurers would not have entered into D&O policies on the same terms and conditions, and for the same premium, if there had been disclosure as required by s 21 and had no misrepresentation been made: [220]-[249].

As to Issue (8)

1. The Court was satisfied on the balance of probabilities that the representations in the Iraq File Note were true: [269]-[282].

   Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19, applied.

2. The Court was satisfied that Leighton paid money to Unaoil not just for their subcontracting package, but also for them to assist Leighton in winning the Iraq Phase 1 Contract: [314]-[318].

3. The Court was not satisfied that any part of the money paid by Leighton was in fact used for corrupt payments so that Leighton would win the Iraq Phase 1 Contract: [323]-[326], [331]-[332].

4. The Court was satisfied that Mr Savage was aware that the payments referred to in the Iraq File Note may have been unlawful and that this knowledge should be attributed to Leighton. Had it been necessary to do so, the Court would have found that Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act and made a misrepresentation to the 2011 Insurers for this additional reason: [333]-[336].

5. However, the Court was not satisfied that Mr Savage, or Leighton, knew, reasonably believed or believed (all of which require something more than an awareness that the payment may have been unlawful) that the payment was unlawful. In this regard, the 2011 Insurers did not contend that “unlawful” meant anything other than payments for the purpose of a bribe and the Court approached Issue 8 on the understanding that that was its intended meaning: [337].

As to Issue (1)

1. The answer to Issue 1 is no: [370].

2. There is nothing in the language of cl 5.3 that would amount to a waiver of the 2011 Insurers’ rights under s 28(3) for misrepresentation. Part of the objective matrix of facts against which the 2011 Policy is to be construed is the fact that Leighton was required to complete, and did complete, the 2011 Proposal which sought disclosure of facts of which Leighton was aware which might give rise to a claim against a director or officer: [354]-[355].

3. The Court did not accept that the duty of disclosure was waived. Clear words would be expected for such a conclusion, particularly where the policies were entered into on the basis of a proposal that asked whether Leighton was aware of any circumstances which might give rise to a claim being made against any directors or officers of Leighton or its subsidiaries. Further, the fact that cl 7.1 preserves remedies for the Insurer in respect of non-fraudulent misrepresentation or non-disclosure in respect of the Company Securities Claims is inconsistent with a construction of cl 5.3 that the duty of disclosure was waived: [361]-[362].

As to Issue (2)

1. Issue 2 should be answered no. The primary judge was correct to conclude that the erosion of AIG’s liability under the 2010 Primary Policy and Chubb’s liability under the 2010 First Excess Policy did not affect their liability for the Investigation Costs under the 2011 Primary Policy: [416]-[418].

2. The critical words are those in the chapeau to cl 5.3 that “cover is provided under this policy” (emphasis added) and the distinction between that language and the language of cl 5.3(ii) that the claim is to be “dealt with” in accordance with the terms, conditions, exclusions and limitations of the policy under which the claim or circumstance could and should have been notified. It is clear from the chapeau to cl 5.3 that it is the 2011 Policy which provides the cover. Hence, the Limit of Liability is prescribed by cl 6.1 of the 2011 Policy, which refers to the “total amount payable by the Insurer under this policy” (emphasis added). Cover under cl 5.3 is provided “under” the 2011 Policy: [412].

3. In the phrase “terms, conditions, exclusions and limitations of the policy…”, “limitations” takes its meaning from the other words used. No doubt that involves surplusage. But it is not always the case that in a policy such as this it should be taken that each word should be given separate work to do. It is also to be noted that the word on which Chubb places reliance, “limitation”, is not the word used in cl 6 of both the 2010 and 2011 Policies. Clause 6.1 of those policies refer to the Insurer’s “Limit of Liability” being the amount specified in Item 5 of the Schedule ($30 million in the case of the 2011 Policy): [413]-[414].

As to Issues (3), (4) and (5)

1. In the light of the conclusion that the primary judge erred in making the 2010 Declaration, any views expressed on Issues 3, 4 or 5 would be obiter except in so far as they arise on AIG’s claim for contribution against Berkley (Issue 11). Given that any views, particularly in relation to Issue 5, would be based upon the evidence as adduced before the primary judge, which might be different from the evidence adduced on a new claim, if one were brought, any conclusions would be liable to complicate any future hearing against the 2010 Insurers. Nor would it be appropriate to express a view on the construction of cl 5.1 where it is unnecessary to do so for the disposition of these proceedings, where that may be expected to be a live issue in any future proceeding against the 2010 Insurers heree the submissions in any such future proceeding might differ from those advanced below or in this Court. As a general proposition, courts, at least courts below the High Court, should confine themselves to deciding only those issues which they need to decide. Insofar as it was necessary to reach conclusions on these issues on AIG’s cross-claim against Berkley for contribution for the AFP Investigation Costs and the ASIC Iraq Investigation Costs, to the extent any of those conclusions may give rise to issue estoppels, such estoppels would only arise as between AIG and Berkley: [425]-[427].

   Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32; Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71, considered.

As to Issue (9)

1. Given the findings and reasoning below concerning Issues 13 and 15, and why the primary judge erred in making the declaration in Order 13, it is neither necessary nor appropriate to answer Issue 9: [428].

As to Issue (10)

1. As the primary judge said at J[487]-[488], in light of her Honour’s findings that the 2011 Insurers were not liable to pay CIMIC for the Company Securities Claims, the question of construction does not arise. As the 2011 Insurers are entitled to reduce their liability for the Company Securities Claims to nil, cover is provided only for the non-Company Securities Claims and the relevant retention is $100,000: [431].

As to Issue (11)

1. For AIG to be entitled to contribution from Berkley for the Investigation Costs CIMIC incurred, both must be liable to CIMIC and their liability must be coordinate. That will be so where there is double insurance, that is, where both insurers are liable to the insured for the same loss and where payment under one policy will relieve the other insurer from a liability which it would have if a claim had been made against it. Both insurers’ obligations must be of “the same nature and to the same extent”: [450].

   Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342; [1969] HCA 55; HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31, applied.

2. Without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley for the Investigation Costs. If the notification of circumstances of the Iraq File Note had been given in the Policy Period applicable to Berkley’s 2010 Third Excess Policy, then AIG’s 2010 Primary Policy would not have responded because the limit of cover under its policy was exhausted. Only Berkley’s 2010 Third Excess Policy would have responded. There would have been no mutuality of obligation and no coordinate liability: [452].

3. Clause 5.1 does not refer to the Insured’s expectation of a possible Claim or a Claim that might be made against it. A Claim is relevantly defined in cl 4.5(i) as a written demand, or civil regulatory or administrative proceeding seeking compensation or other legal remedy made or brought against an Insured alleging a Wrongful Act. In other words, there is nothing in the definition of Claim which encompasses possible claims. For cl 5.1 to be engaged there must be an actual expectation (reasonably held) that the circumstances notified would give rise to a claim. The reasons for anticipating “that Claim” with full relevant particulars must be provided: [489].

4. AIG did not allege that Leighton had expected that the circumstances referred to in the Iraq File Note would give rise to a claim: [480]. The primary judge’s findings fell short of a finding that Leighton expected that a claim would be made arising from the circumstances in the Iraq File Note. A reasonable person in the position of Leighton’s executives could have had such an expectation. But their failure to form that expectation was not a relevant omission (and was not alleged to be a relevant omission) for the purposes of s 54: [490]-[491].

5. In the context of cl 5.1 it is the forming of a reasonable expectation of a claim and not merely becoming aware of circumstances that could give rise to a claim that is a “restriction or limitation” inherent in the claim that could be made. An omission to form an expectation that a claim would arise from the circumstances of the Iraq File Note is not a relevant omission for which relief is available under s 54. The primary judge erred in ordering contribution from Berkley in respect of AIG’s liability for the Investigation Costs: [492]-[493].

As to Issues (12), (13) and (15)

1. The primary judge erred in making Order 13. In the particular circumstances, the Court lacked jurisdiction to do so. There were many facts and issues which would require determination before there could be an ultimate finding as to whether or not the 2010 Insurers were obliged to indemnify CIMIC. The declaration which was granted was, in substance and effect, an advisory opinion. It ought not to have been made: [495]-[569].

2. If it be assumed (contrary to the above) that the Court had jurisdiction to grant some form of declaratory relief in the circumstances here, the exercise of that discretion miscarried: [570]-[594].

As to Issue (14)

1. No weight should be given to the affidavit of Mr Jonathon Light. The basis for Mr Light’s estimate is speculative, expressed at such a high level of generality as to provide little if any guidance or support and simply involved unsupported assertions. Accordingly, the Court accepted Arch/Dual’s submission that another reason why Order 13 should not have been made against them is that CIMIC’s case against them was hypothetical as there was no evidence that the 2010 Sixth Excess Policy would be triggered: [608]-[609].

2. The contention that any future claims for costs arising out of the AFP Investigation and criminal prosecutions generated from that investigation might fall within the 2012 Notification was not contested by CIMIC on the appeal. It provides another reason why, assuming contrary to the above that Order 13 was appropriately made, it ought not to have included Arch/Dual: [610]-[611].

As to Issue (16)

1. Order 7 of the primary judge’s costs orders, that there be no order as to the costs between CIMIC and the 2010 Insurers, must be set aside because the declaration in Order 13 is to be set aside. Order 8 of the primary judge’s costs orders must also be set aside because Berkley’s appeal against Orders 9 to 11 for contribution obtained by AIG is to be allowed: [612]-[623].

As to Berkley’s complaint of procedural unfairness

1. There is no substance in Berkley’s complaint of procedural unfairness relating to its opportunity to test the evidence of Messrs Stewart and Wild. Berkley failed to identify with sufficient particularity the scope of its cross-examination of Mr Stewart. Berkley has demonstrated no practical injustice which it suffered as a result of the limitations imposed by the primary judge on its questioning of Mr Stewart. Moreover, Berkley did not press its request to cross-examine Mr Wild: [624]-[629].

Table of contents

The losses for which CIMIC claimed

The towers of insurance for the 2010 and 2011 years

The primary judge’s orders and declarations

The appeals, cross-appeals and notices of contention before the Court

The policies of insurance

The issues to be determined and the structure of this judgment

Fact finding on appeal

Summary of factual background

Operational structure of Leighton

Leighton’s Operations in Iraq

Unaoil and Mr Oday

Iraq Phase 1 Project

Iraq Phase 3 Project

The Iraq File Note

Witness evidence about the Iraq File Note

The 2011 Proposal

Discovery of the Iraq File Note

Notification to the 2011 Insurers

Issue 6: Did the primary judge err in finding that CIMIC breached its duty of disclosure under s 21 of the Insurance Contracts Act, and made a misrepresentation to the 2011 Insurers?

Section 21 of the Insurance Contracts Act

Applicable principles

The primary judge’s key findings as to breach of s 21 and the parties’ challenges to these findings

Arrangements between Leighton Offshore and Unaoil

The Iraq File Note

Leighton’s knowledge for the purposes of s 21

Mr Stewart and Mr Wild

Mr Savage

Consideration

Conclusion as to Issue 6

Issue 7: Did the primary judge err in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act?

Section 28 of the Insurance Contracts Act

Applicable principles

Background facts and the primary judge’s findings as to s 28(3)

AIG

The evidence before the Court

The primary judge’s findings

Chubb

The evidence before the Court

The primary judge’s findings

Catlin

The evidence before the Court

The primary judge’s findings

Liberty

The evidence before the Court

The primary judge’s findings

Consideration

AIG

Chubb, Catlin and Liberty

Conclusion as to Issue 7

Issue 8: Did the primary judge err in failing to find that CIMIC breached its duty of disclosure under s 21, and made a misrepresentation to the 2011 Insurers, for the additional reason that from the date of the Iraq File Note (23 November 2010), CIMIC knew and/or reasonably believed or believed, but did not disclose to the 2011 Insurers the facts recorded in the Iraq File Note and that the payments referred to therein were or may be unlawful?

Should the primary judge have found that the representations recorded in the Iraq File Note were true?

Did the primary judge err in concluding that there was insufficient evidence of “corrupt payments to win the Iraq work”?

The Iraq File Note as a whole

Mr Oday’s role and relationship with Unaoil

Interactions between Unaoil and Mr Waugh

Subsequent communications involving Mr Oday, Unaoil and Mr Waugh

The MOAs and the liquidated damages provisions

The US$15 million for the “heavy lift” vessel added on 26 May 2010

Communication of confidential information to Unaoil and Mr Waugh

What inference should be drawn in the circumstances?

Did the primary judge err at J[264] and [266] in failing to find that Mr Savage knew the payments referred to in the Iraq File Note were or may be unlawful?

Conclusion as to Issue 8

Issue 1: Do cll 7.1 and 5.3 of the 2011 Primary Policy preclude the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act?

Issue 2: Does cl 5.3(ii) of the 2011 Policy operate so that the 2010 Primary Policy’s limit of liability (as reduced by amounts previously paid) applies to CIMIC’s claims?

Issue 3: What is the proper construction of cl 3.2(i) of the 2011 Policy?

Issue 4: What is the proper construction of cl 5.1 of the 2010 Policy?

Issue 5: If cl 5.1 is to be construed as contended for by Berkley, on the primary judge’s findings could CIMIC have notified under cl 5.1 of the 2010 Primary Policy?

Issue 9: Did the primary judge err in failing to find that, in addition to finding that CIMIC could have notified under cl 5.1 of the 2010 Primary Policy or s 40(3) of the Insurance Contracts Act, CIMIC could also have notified several additional matters under cl 5.1 and/or s 40(3)?

Issue 10: Did the primary judge err in identifying the retention applicable to CIMIC’s claim against the 2011 Insurers?

Issue 11: Did the primary judge err in concluding that, if necessary, AIG was entitled to equitable contribution of 50% from Berkley and Swiss Re?

Issue 12: Did the primary judge err in making the declaration against the 2010 Insurers based on the pleadings against them?

Issue 13: Did the primary judge err in making the declaration against the 2010 Insurers where that relief does not address any ultimate or decisive fact?

Issue 15: Did the primary judge err in making the declaration against the 2010 Insurers on the grounds that the declaration was hypothetical, lacked utility “including because CIMIC has never made a claim or notified any circumstances to the 2010 Insurers and it is too late to do so”, was contingent upon the claim against the 2011 Insurers failing, was vague and failed to quell any justiciable controversy?

Some background matters

The proceedings below concerning CIMIC’s alternative case against the 2010 Insurers

Consideration and determination of challenges concerning Order 13

Federal jurisdiction

The primary judge’s reasons in support of granting a form of the alternative declaration sought by CIMIC

The challenges to Order 13

Jurisdiction to grant declaration in terms of Order 13

Alternatively, the Court’s discretion to grant declaratory relief miscarried

Issue 14: Did the primary judge err in making the declaration against Arch/Dual based on her Honour’s findings and the failure to deal with the submissions summarised at J[623]?

The pleading objections

Mr Light’s affidavit and the question whether Arch/Dual’s layer would be reached

Whether future claims for costs fell within the 2012 Notification

Issue 16: Did the primary judge err in exercising the costs discretion?

Berkley’s complaint of procedural unfairness

Costs of the appeal

Judgment

1. THE COURT: These appeals arise out of a dispute between CIMIC Group Limited (“CIMIC”), formerly Leighton Holdings Limited (“Leighton”), and its tower of Directors’ and Officers’ Liability and Company Security (“D&O”) insurers for the financial year commencing 30 June 2011 (“2011 Insurers” and “2011 year” respectively). Whilst numerous issues are raised by multiple parties, those issues fall broadly within three categories. First, did the primary judge err in finding that the 2011 Insurers were not liable to indemnify CIMIC for losses which CIMIC claimed fell within the ambit of the relevant policies. Second, did the primary judge err in not making additional findings adverse to CIMIC, which the 2011 Insurers say would have provided further support for the conclusion that the 2011 Insurers were not liable under the policies. Third, did the primary judge err in making a declaration as to a matter which had some relevance to potential liability of Leighton’s insurers for the financial year commencing 30 June 2010 (“2010 Insurers” and “2010 year”, respectively) where no claim had been notified.

2. The dispute stems from a notification on 23 February 2012 by Leighton to two of the 2011 Insurers (AIG Australia Limited (“AIG”) and Chubb Insurance Australia Ltd (“Chubb”) (together the “2011 Primary Insurers”)) of a possible loss (“2012 Notification”).

3. The 2012 Notification attached a Leighton ASX media release of 13 February 2012 (“2012 ASX Media Release”), which identified that Leighton had reported to the Australian Federal Police (“AFP”) a possible breach of Leighton’s Code of Ethics that, if substantiated, may contravene Australian laws. The report to the AFP occurred on 7 November 2011 when Leighton’s solicitors gave to the AFP a handwritten document headed “Iraq Project Discussion File Note 23/11/10” (“Iraq File Note”) which was written on 23 November 2010 by David Stewart, Leighton’s incoming Chief Executive Officer (“CEO”) and then Chief Operating Officer (“COO”). The content of the Iraq File Note, which plays a central role in these proceedings, is set out at [90] below. The primary judge found that, by the 2012 Notification, Leighton notified a claim under the 2011 primary insurance policy held with AIG and Chubb (“2011 Primary Policy”).

4. In this judgment, for convenience only, we refer to the first respondent in these proceedings as “Leighton” when referring to events between 2010 and 2012 and as “CIMIC” when referring to more recent events. No significance attaches to our use of Leighton or CIMIC as regards any particular occurrence or finding. When reference is made generally to the relevant policies in a year, we refer to eg 2010 Policy/Policies and 2011 Policy/Policies. Where we refer to terms (capitalised) that are defined in the policies, we refer to the term as defined in that policy.

Background

The losses for which CIMIC claimed

5. The various losses which CIMIC claimed fell under either the 2011 Primary Policy or the various excess layers (“2011 Excess Policies”, together the “2011 Policies”) or under the primary D&O policy for the 2013 financial year held with Chubb (“2013 Primary Policy”), and their quantification as found by the primary judge, were as follows:

1. The AFP Investigation Costs, being costs incurred by CIMIC in connection with an investigation by the AFP into matters which were the subject of the referral by Leighton to the AFP on 7 November 2011. The AFP Investigation Costs were $225,000 plus $70,000 in interest payable by each of AIG and Chubb in equal parts.

2. The ASIC Non-Iraq Investigation Costs, being costs incurred in connection with an investigation by the Australian Securities and Investments Commission (“ASIC”) which had no connection to the 2012 Notification. The ASIC Non-Iraq Investigation costs were $63,350 plus $21,750 in interest.

3. The ASIC Iraq Investigation Costs, being costs incurred by CIMIC in connection with an investigation by ASIC into suspected contraventions of ss 181, 184 and/or 1307 of the Corporations Act 2001 (Cth) by the directors, officers and/or employees of Leighton and/or its subsidiaries in relation to payments made to third parties between 2009 and 2011 in order to secure contracts for the development of offshore loading facilities for crude oil exports in Iraq. The ASIC Iraq Investigation Costs were $1,013,600 plus interest of $348,000 payable by each of AIG and Chubb in equal parts.

4. The Gregg Prosecution Costs, being costs incurred in connection with the investigation and defence of the (ultimately unsuccessful) prosecution of Peter Gregg, the Chief Financial Officer (“CFO”) of Leighton. These were unrelated to the Iraq File Note. The Gregg Prosecution Costs were $2,512,000 plus $422,000 in interest.

5. The MCI Class Action Defence Costs, being costs incurred in connection with the investigation and defence of two representative proceedings commenced by Melbourne City Investments Pty Ltd (“MCI Class Action”). These included claims of misleading or deceptive conduct and breaches of continuous disclosure obligations arising out of an alleged failure to disclose the Iraq File Note. The MCI Class Action Defence Costs were $1,190,000.

6. The Inabu Class Action Defence Costs, being costs incurred in connection with the investigation and defence of representative proceedings commenced by Inabu Pty Ltd (“Inabu Class Action”). These also included claims of misleading or deceptive conduct and breaches of continuous disclosure obligations arising out of an alleged failure to disclose the Iraq File Note. The Inabu Class Action Defence Costs were $7,233,000.

7. The Inabu Settlement Amount, being the settlement amount of $32.4 million paid in the Inabu Class Action.

6. For convenience, in this judgment we will refer to the MCI and Inabu Class Action Defence Costs and the Inabu Settlement Amount collectively as the “Company Securities Claims”.

7. Leighton had also entered into D&O primary and excess policies of insurance for the financial year commencing 30 June 2010 (“2010 Primary Policy” and “2010 Excess Policy” respectively, together the “2010 Policies”). CIMIC did not make a claim on the 2010 Insurers under those policies. But it did seek a declaration that if, as alleged by various of the 2011 Insurers as a basis for their denial of liability, the circumstances that gave rise to the claim could and should have been notified under the 2010 Policies, then, as against various of the 2010 excess insurers, it remained entitled to notify such circumstances under the 2010 Policies.

The towers of insurance for the 2010 and 2011 years

8. The two towers of CIMIC’s Directors’ and Officers’ Liability and Company Securities Insurance (“D&O Insurance”) for the 2010 and 2011 years are set out in the below diagram, which is derived from CIMIC’s written submissions at first instance and is extracted in the primary judgment. The extent of erosion of each layer, as set out in CIMIC’s written submissions dated 3 June 2022, is also indicated.

9. Where we refer, in this judgment, to the 2010 and 2011 Primary and Excess Insurers, we are referring to the various insurers described in this diagram.

10. The inception date for the contracts of insurance for the 2010 year was 30 June 2010. For the 2011 year it was 30 June 2011.

The primary judge’s orders and declarations

11. CIMIC brought proceedings against both the 2010 and 2011 Insurers. Only declaratory relief was sought against the 2010 Insurers, but the 2011 Insurers were sued under the 2011 Policies. The 2011 Insurers sought equitable contribution from the 2010 Insurers. By orders made on 12 October 2022 (the “Orders”) the primary judge dismissed the claims made by CIMIC against Catlin Syndicate Limited and Catlin Australia Pty Limited (together “Catlin”) and Liberty Mutual Insurance Company (“Liberty”), upheld a cross-claim for equitable contribution by AIG against Berkley Insurance Company (“Berkley”) and dismissed the cross-claim for equitable contribution by AIG against Swiss Re International SE (“Swiss Re”). The primary judge also made a number of declarations. These are considered in detail below. Reduced to their bare essentials, and excluding declarations as to interest and costs, the declarations provided as follows:

As regards the 2011 Policies

1. The 2011 Insurers are not, under the 2011 Policies, liable to indemnify CIMIC for the ASIC Non-Iraq Investigation Costs, the Gregg Prosecution Costs or the Company Securities Claims.

2. AIG and Chubb, being the 2011 Primary Insurers, are each severally liable to indemnify CIMIC in accordance with the terms and conditions of the 2011 Primary Policy and subject to a single retention of $100,000 for costs paid by CIMIC after 8 May 2014 in respect of the AFP Investigation Costs and the ASIC Iraq Investigation Costs, together with interest.

3. Chubb is liable under the 2013 Primary Policy, subject to its terms and conditions, for the Gregg Prosecution Costs and the ASIC Non-Iraq Investigation Costs (in respect of one investigation) less a retention of $1 million, and the ASIC Non-Iraq Investigation Costs (in respect of another investigation) less a retention of $1 million, together with interest.

4. The Continuity Date applicable to the 2011 First Excess Policy, which Leighton held with Catlin (“Catlin’s 2011 First Excess Policy”), is 30 June 2011.

As regards the 2010 Policies

5. By 23 November 2010, Leighton was aware of the following circumstances:

1. on 23 November 2010, Leighton’s CEO-designate, Mr Stewart, had a conversation with David Savage, a COO of Leighton, during which Mr Savage made representations to the effect of those recorded in the Iraq File Note; and

2. the matters identified at J[318] of the primary judgment, set out below at [131], which, collectively, were reasonably expected to give rise to a Claim (as defined in the 2010 Primary Policy) pursuant to cl 5.1 of the 2010 Primary Policy and accordingly could have been notified to each of Chubb, Berkley, Swiss Re, Zurich Australian Insurance Limited (“Zurich”), Arch Underwriting at Lloyd’s Limited on behalf of Syndicate 2012 (“Arch”) and Dual Australia Pty Ltd (“Dual”) (being the first to sixth excess insurers for the 2010 year) under their respective excess policies. We will refer to this as the 2010 Declaration.

12. It is of some significance to the issues raised on appeal that the 2010 Declaration was in a substantially different form from that sought in CIMIC’s further amended summons. The declaration as then sought was that CIMIC was entitled as against Berkley, Swiss Re, Zurich, Chubb, Arch and Dual, in reliance upon s 54(1) of the Insurance Contracts Act1984 (Cth) and the “Notification” and “Deeming” clauses, cll 5.1 and 5.4 respectively incorporated into the 2010 Policies, to notify circumstances, being the existence and contents of the Iraq File Note.

13. Broadly, the orders and declarations of the primary judge were supported by findings that:

1. In respect of the Company Securities Claims, the 2011 Insurers were entitled to rely upon pre-inception non-fraudulent non-disclosure or misrepresentation under ss 21 and 28(3) of the Insurance Contracts Act to reduce their liability to nil.

2. As regards the AFP Investigation Costs and the ASIC Iraq Investigation Costs, the 2011 Insurers were not entitled to any remedy for non-fraudulent non-disclosure as such remedies had been excluded by cl 7.1 of the 2011 Primary Policy. Claims for indemnity for costs incurred up to and including 7 May 2014 were, however, statute barred pursuant to s 14(1)(a) of the Limitation Act 1969 (NSW).

3. Chubb was liable for the Gregg Prosecution Costs and the ASIC Non-Iraq Investigation Costs as these fell within the indemnity given under the 2013 Primary Policy and these costs did not have the requisite connection to the 2012 Notification and thus did not fall within the 2011 Primary Policy.

4. If necessary, AIG was entitled as against Berkley (but not Swiss Re) to equitable contribution in an amount that is 50% of the amount paid by AIG to CIMIC in respect of the AFP Investigation Costs and ASIC Iraq Investigation Costs as the loss was covered by both policies as at the time of the insuring clause event.

5. The Court both had power to, and should, make the 2010 Declaration as it would have the effect of ensuring that a notification under cl 5.1 (if made) would not be rejected only on the basis that the circumstance was not reasonably expected to give rise to a claim (as is necessary under cl 5.1), but would leave open the possibility that the notification would still not lead to an indemnity for other reasons.

The appeals, cross-appeals and notices of contention before the Court

14. The appeals, cross-appeals, and notices of contention (“NOCs”) raise overlapping matters of some complexity. By way of summary only, the following challenges are raised in this Court.

The Zurich Appeal

1. Zurich appeals against the primary judge’s decision to make the 2010 Declaration and against the primary judge’s finding that the 2011 Insurers were entitled to rely upon non-disclosure to reduce their liability, in respect of the Company Securities Claims, to nil under s 28(3) of the Insurance Contracts Act, including having regard to cll 5.3 and 7.1 of the 2011 Primary Policy (“Zurich Appeal”).

2. CIMIC cross-appeals, contending that if Zurich succeeds in its appeal in relation to the 2011 Insurers’ liability, then consequential orders should be made ordering that AIG, Chubb and Liberty are liable under the 2011 Primary Policy and the 2011 Second Excess Policy to indemnify CIMIC in respect of the Company Securities Claims and are also liable to pay interest on these costs.

3. AIG also cross-appeals, contending that if Zurich succeeds in its appeal against the primary judge’s findings in relation to the 2011 Insurers’ liability, then consequential orders should be made ordering that Berkley and Swiss Re pay, by way of equitable contribution, 50% of the amount paid by AIG to CIMIC in respect of the Company Securities Claims and, for Swiss Re only, the AFP Investigation Costs and the ASIC Iraq Investigation Costs.

4. Swiss Re has filed a NOC, disputing that AIG is entitled to equitable contribution against it.

5. AIG and Liberty have also filed NOCs, contending that the order that AIG and Liberty are not liable to indemnify CIMIC for the ASIC Non-Iraq Investigation Costs, the Gregg Prosecution Costs and the Company Securities Claims be affirmed on the further ground that the primary judge should have found that any liability of AIG and Liberty under cl 5.3 is limited to such amount set out in the 2010 Primary Policy and 2010 Second Excess Policy as was not already exhausted by payments previously paid, which was nothing as the relevant limits of liability were already exhausted.

The Arch/Dual Appeal

6. Arch and Dual appeal against the primary judge’s decision to make the 2010 Declaration (“Arch/Dual Appeal”).

The Berkley Appeal

7. Berkley appeals against the primary judge’s decision to make the 2010 Declaration, against the order for equitable contribution and against the primary judge’s rejection of Berkley’s limitation defences against both the declaratory relief and the order for equitable contribution (“Berkley Appeal”).

8. CIMIC cross-appeals, contending that the primary judge erred in finding that Leighton had breached its duty of disclosure under s 21(1)(b) of the Insurance Contracts Act and in finding that the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act. CIMIC also challenges the primary judge’s finding that Leighton made a misrepresentation which constituted a failure under s 27AA of the Insurance Contracts Act and that the 2011 Insurers were entitled on that account to reduce their liability to nil under s 28(3) of the Insurance Contracts Act. CIMIC also contends that if Berkley succeeds in its contention that the primary judge erred in finding that Leighton was aware of facts that could have been notified under cl 5.1 of the 2010 Primary Policy during the period of that policy, then the primary judge also erred in finding that the prior claims and circumstances exclusion in cl 3.2 of the 2011 Primary Policy was enlivened. Finally, CIMIC contends that the primary judge erred in finding that the retention was $1 million, and that the retention applied at the primary insurance layer and at each excess layer.

9. CIMIC has also filed a NOC, contending that if Berkley succeeds in persuading the Court that cl 5.1 of the 2010 Primary Policy requires that CIMIC have a subjective expectation of a claim, the 2010 Declaration should be affirmed on the ground that, on the primary judge’s findings, Mr Stewart had such a subjective expectation.

10. AIG has filed a NOC, contending that the primary judge erred in:

1. Failing to find that the facts and representations by Mr Savage recorded in the Iraq File Note are true and that CIMIC was aware of those facts and representations by at least 23 November 2010 (being the date of the Iraq File Note).

2. Failing to find that the Unaoil Memoranda of Understanding (“MOU”) and Memoranda of Agreement (“MOA”) involved corrupt payments made so that Leighton could win the Iraq Phase 1 and Phase 3 Projects and that Leighton agreed to pay Unaoil additional money to be used improperly so Leighton could win these projects.

3. Failing to find that Mr Savage was aware on 23 November 2010 that unlawful payments had been made by Leighton to Unaoil in order to win the Iraq Phase 1 Contract and that he was proposing that Leighton make further unlawful payments to Unaoil in order to win the Iraq Phase 3 Contract.

4. Failing to find that the purpose of the liquidated damages clause in the MOUs between Leighton and Unaoil was to ensure that Unaoil was compensated for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract, in the event that contract was awarded to Leighton but Leighton failed to award the onshore works subcontract to Unaoil.

5. Failing to find that Leighton agreed to pay Unaoil about US$20 million (or many millions) more than it would otherwise have cost Leighton to complete the onshore works.

6. Failing to find that at least the US$15 million described by Russell Waugh (CEO of Leighton Offshore) as “a provision for third party vehicle for heavy lift” was Unaoil’s fee for using its influence and making improper payments to help Leighton win the Iraq Phase 1 Contract.

7. Relying upon the ASIC transcript of Mr Savage’s compulsory examination when the evidence was subject to a limitation under s 136 of the Evidence Act 1995 (NSW) that precluded such reliance.

8. In making findings that there was no direct evidence that Unaoil ever paid money to anyone in the Southern Oil Company (“SOC”).

9. In making findings that there was no evidence that Oday Al Quoraishi of SOC agreed a retainer with Unaoil.

10. In making findings that there was no evidence that anyone at Leighton was made aware of such retainer.

11. In making findings that the Unaoil MOUs and MOAs provided Leighton with commercially justifiable advantages, and in findings leading to that conclusion.

12. In failing to find that CIMIC breached its duty of disclosure under s 21(1)(b) of the Insurance Contracts Act for the reason that from at least 23 November 2010 Leighton knew but did not disclose:

1. the facts recorded in the Iraq File Note;

2. that Leighton Offshore Pte. Ltd. (“Leighton Offshore”), a subsidiary of Leighton, had won a US$733 million contract in Iraq by paying a subcontractor about US$87 million, which was more than twice the real value of the work being performed by that subcontractor;

3. that Leighton Offshore had an opportunity to negotiate a US$500 million extension to the Iraq Phase 1 Contract, but in order to win that extension it would be required to pay US$50 to 60 million to the same subcontractor, which was more than twice the real value of the work to be performed by that subcontractor; and

4. that the payment and proposed payment to the subcontractor were, or may be, unlawful.

11. Chubb has filed a NOC repeating the grounds in AIG’s NOC.

12. Catlin has filed a NOC repeating the grounds in AIG’s NOC and also contending that CIMIC could have notified the 2010 Insurers under cl 5.1 as it had the requisite subjective state of mind.

13. Liberty has filed a NOC repeating the grounds in AIG’s NOC and also contending, as in the Zurich Appeal, that the primary judge’s order that it was not liable to indemnify CIMIC be affirmed on the further ground that its liability was already exhausted.

The Chubb Appeal

14. Chubb appeals against the finding that CIMIC was entitled to indemnity from Chubb under cl 5.3 of the 2011 Primary Policy for the AFP Investigation Costs and the ASIC Iraq Investigation Costs notwithstanding that the Limit of Liability under the 2010 First Excess Policy Leighton held with Chubb (“Chubb’s 2010 First Excess Policy”) had been exhausted (“Chubb Appeal”).

15. Challenges are also made to the exercise of discretion as to costs.

The policies of insurance

16. The parties’ Agreed List of Issues to be determined on the appeal (see below at [25]) refer to the following clauses of the 2010 and 2011 Policies. The wording of those clauses was common to all policies, although there was a different Continuity Date for Catlin’s 2011 First Excess Policy ($10 million in excess of the primary cover of $30 million) than for the other policies. In Catlin’s 2011 First Excess Policy, the Continuity Date was 30 June 2011. In the other policies the Continuity Date was 30 June 2005.

17. Clause 1.2 provided that the Insurer would pay the Loss of each Company arising from a Securities Claim. A Securities Claim was defined as follows:

“4.32   Securities Claim

(i)   any written demand or civil, criminal, or arbitration proceedings

(ii)   any administrative or regulatory proceeding also commenced and continuously maintained against an Insured Person:

alleging a violation of any laws (statutory or common), rules or regulations regulating Securities, the purchase or sale or offer or solicitation of an offer to purchase or sell Securities, or any registration relating to such Securities:

(a)   brought by any person or entity alleging, arising out of, based upon or attributable to the purchase or sale, or offer or solicitation of an offer to purchase or sell any Securities of a Company;

(b)   brought by a Security holder of the Company with respect to such Security holder’s interest in Securities of such Company; or

(c)   brought derivatively on behalf of a Company by a Security holder of that Company;

seeking compensation or other legal remedy against any Company for a specified Wrongful Act.” (Emphasis in original.)

18. As defined, Loss included any amount an Insured was legally liable to pay resulting from a Claim and Defence Costs. The latter included reasonable expenses incurred with the Insurer’s written consent in defence or settlement of a claim.

19. Clause 3.2 relevantly provided:

“3.   Exclusions

The Insurer shall not be liable under any Cover or Extension for any Loss:

…

3.2   Prior Claims and Circumstances

subject to Section 5.3 (‘Continuity’), arising out of, based upon or attributable to:

(i)   facts alleged or the same or related Wrongful Act(s) alleged or contained in any Claim which has been or could have been reported or in any circumstances of which notice has been or could have been given under any policy of which this policy is a renewal or replacement or which it may succeed in time; or”. (Emphasis in original.)

20. Clauses 5.1, 5.3 and 5.4 relevantly provided:

“5.1   Notification of Claims and Circumstances

The Covers provided under this policy are granted solely with respect to Claims first made against or by an Insured during the Policy Period, or applicable Discovery Period, or accepted as such in accordance with Section 5.4 (‘Related Claims or Circumstances’), only if such Claims have been notified to the Insurer as soon as practicable, after the Policyholder’s Risk Manager or General Counsel (or equivalent position) first becomes aware of such Claim, but in all events no later than either:

(i)   during the Policy Period or applicable Discovery Period; or

(ii)   within 60 days after the end of the Policy Period or the applicable Discovery Period, as long as notice is given to the Insurer within 60 days after such Claim was first made against an Insured.

Any Insured may, during the Policy Period or applicable Discovery Period, notify the Insurer of any circumstance reasonably expected to give rise to a Claim. The notice must include the reasons for anticipating that Claim, and full relevant particulars with respect to dates, the Wrongful Act (if applicable) and the potential Insured and claimant concerned.

The details of any other insurance policy which may apply to any Loss covered under this policy shall be reported to the Insurer within a reasonable time of any Claim notification.

All notifications relating to Claims or circumstances must be in writing or sent by facsimile to the address in Item 13 of the Schedule.

…

5.3   Continuity

Notwithstanding Exclusion 3.2 (‘Prior Claims and Circumstances’), cover is provided under this policy for any Claim, or circumstance, which could or should have been notified under any earlier policy, provided always:

(i)   the Claim, or circumstance, could and should have been notified after the Continuity Date; and

(ii)   the Claim shall be dealt with in accordance with all the terms, conditions, exclusions and limitations of the policy under which the Claim, or circumstance, could and should have been notified.

5.4   Related Claims or Circumstances

If a Claim or circumstance is notified under this policy, then any subsequent Claim, alleging, arising out of, based upon or attributable to the facts or Wrongful Act alleged in that Claim, or described in that circumstance, shall be deemed to have first been made at the same time as that Claim was first made or that circumstance notified, and notified to the Insurer on the date the notices were first provided.

…”. (Emphasis in original.)

21. Clauses 7.1, 7.3 and 7.4 provided:

“7.1   Non-Rescindability

This policy is not avoidable or rescindable in whole or in part and the Insurer shall have no other remedy with respect to any pre-inception misrepresentation or pre-inception non-disclosure by any Insured in connection with this policy, except with respect to Insurance Cover 1.2 (‘Company Securities’).

If the Insurer has a right to reduce its liability under Section 28(3) of the Insurance Contracts Act 1984 (Commonwealth) for any fraudulent misrepresentation or fraudulent non-disclosure of a matter or fact established by final adjudication of a judicial or arbitral tribunal, or any formal written admission by or on behalf of any Insured, the Insurer will only exercise such right against that Insured.

…

7.3   Severable Nature of the Policy

This policy covers each Insured for its own individual interest.

No statements made by or on behalf of an Insured or breach of any term of this policy, or any information or knowledge possessed by an Insured, shall be imputed to any Insured for the purpose of determining whether any individual Insured is covered under this policy.

With respect to Cover 1.2 (‘Company Securities’), only the statements and knowledge of any Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or Chief Legal Officer/General Counsel (or equivalent positions) of a Company will be imputed to all Companies.

7.4   Changes in Risk

For any United States Securities and Exchange Commission registration or reporting obligation first attaching during the Policy Period, this policy shall not cover any Claims with respect to any Securities Claims brought within or maintained within the jurisdiction, or based upon any laws of, the United States of America, its territories or possessions, unless the Policyholder has given to the Insurer notice of any such registration or reporting obligation and the Insured has accepted whatever terms, conditions and limitations the Insurer deems appropriate to the policy.

This General Provision 7.4 will not apply to Securities purchased or sold pursuant to Rule 144A of the Securities Act of 1933 (US).” (Emphasis in original.)

581. Trans Realties involved a dispute over the sale of land. A contract had been entered into, but not completed, when the vendor issued a notice of rescission. The purchaser sought a declaration that the contract had not validly been rescinded. This was described by Hutley JA as presenting a “false issue”. This was because the validity of the rescission did not only depend upon the grounds given in the notice of rescission; thus the vendor could succeed if other grounds for rescission could be made out.

582. In Trans Realties at 182-183, Mahoney JA stated that, within proper limits, the parties should be given considerable scope to determine what in fact is in dispute between them at a particular time and what it is that they want the Court to determine and that s 63 of the Supreme Court Act gave the parties some choice as to what to bring forward to the Court for determination as a matter of controversy. After referring to the observations of Barwick CJ and Jacobs J in Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286; [1974] HCA 18 (“Neeta”) regarding that subject, Mahoney JA acknowledged, at 185, that a number of matters had to be attended to before the contract of sale could be completed but that the contract was less than precise on those matters. He then added that it was not clear on the material before the Court as to what would in fact be involved in the doing of those things and how much time would be involved. His Honour recognised that if it was likely that disputes would arise in relation to such matters preceding completion, it might be appropriate to determine the issue of the validity of the contract in a proceeding confined to that issue. Absent evidence indicating that the circumstances in Trans Realties were of that description, his Honour considered that the admonitions in Neeta applied.

583. In Trans Realties, Hutley and Glass JJA expressed perhaps even stronger views than did Mahoney JA on the inappropriateness of granting bare declaratory relief in the circumstances there. As noted above, Hutley JA described, at 173, the parties’ approach as offering to the Court “a false issue”. Notwithstanding the reforms effected by ss 63 and 75 of the Supreme Court Act, Glass JA said at 176 that the admonitions in Neeta still applied and that “the public interest in finality will generally override the private interest in selective litigation”.

584. It appears that Kiefel J had similar concerns in Ozmanian when she referred approvingly to Mahoney JA’s reasons in Trans Realties in support of the proposition that it was inappropriate to use declaratory relief so as to create an issue estoppel where there was potential for the parties to dispute the extent of the issue estoppel. That potential also existed here, having regard to the matters highlighted above. We consider that the primary judge failed to consider and give effect to those matters.

585. The cautionary principle concerning the making of bare declarations which emerges from Neeta has not always been applied to cases involving contracts for the sale of land: see Lohar Corp, relevantly quoted in Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies at [19-305]. Nonetheless, the principle has been applied in other settings. Ozmanian itself is such an example. Other examples include Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 482 per Wilcox and Ryan JJ (termination of employment); Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 at 188 (bankruptcy); and Bartz v Department of Corrective Services [2000] QSC 336 at [16] (failure to carry out review of a prisoner’s security classification under s 13(2) of the Corrective Services Regulation 1989 (Qld)).

586. Needless to say, determining whether or not there is any real value or practical consequences to warrant the grant of bare declaratory relief requires close analysis of all relevant circumstances in a particular case. As Kennett J recently remarked in Islam v Director-General, Justice and Community Safety Directorate [2022] ACTSC 124 at [64], there may be a greater propensity to grant such relief in regulatory proceedings, particularly under trade practices legislation:

“…Such declarations in effect merely restate findings of the court which usually form the foundation for a grant of other remedies (such as injunctions or civil penalties) in the same proceedings. They are regarded as having utility on the basis that they define and publicise the type of conduct that constitutes a contravention (See, eg, Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 216 CLR 53, [95] (Gummow, Hayne and Heydon JJ)) or that they signify the court’s disapproval of the relevant conduct (Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, 100 (Sheppard J, Foster J agreeing) (Tobacco Institute). In this class of case the utility of declaratory relief arises from considerations of the public interest (see Tobacco Institute at 107 (Hill J)) rather than concrete consequences for the parties.”

589. In Islam, declaratory relief was granted in judicial review proceedings in which it was established that, in imposing disciplinary action on a prisoner, the corrections officer had failed to comply with various provisions of the Corrections Management Act 2007 (ACT) which gave rise to jurisdictional error.

590. Kennett J concluded that, in those circumstances, it was appropriate to grant declaratory relief because:

1. the declaration would have foreseeable consequences for the applicant, even though those consequences may not be likely to come to pass and may not be of great practical significance (at [66]);

2. even though the prospect of future consequences for the applicant might be seen as “tenuous”, this was not a case where the relevant controversy was either hypothetical or truly moot (at [66]); and

3. other considerations supported the grant of declaratory relief as a matter of discretion, including the fact that the controversy concerned an exercise of public power and there was no other remedy available to the applicant to challenge the disciplinary action.

591. None of those considerations arise here. More significantly, there are several reasons why it was inappropriate to grant relief in the form of Order 13, as explained above.

592. Finally, contrary to CIMIC’s submission, Order 13 is not supported by what the plurality said in Unions NSW at [21]:

“A plaintiff will have and maintain a real or sufficient interest in obtaining relief if and for so long as they seek a declaration of their own rights, legal interests or liabilities, or if and for so long as the declaration sought will directly affect their rights, legal interests or liabilities. Generally, such a declaration will have foreseeable consequences for the plaintiff because they will be able to legally enforce those rights, interests or liabilities. So, for example, a declaration of invalidity of a law (even where the law has been repealed or amended) may have foreseeable consequences for that plaintiff where such a declaration assists to negative a statutory defence to a common law cause of action such as an intentional tort, or where the plaintiff is being prosecuted for breach of that law. The past infringement of certain personal rights or interests of a plaintiff, such as reputation and liberty, may also be sufficient for seeking declaratory relief even where there are no other asserted legal consequences.” (Footnotes omitted.)

593. That paragraph is principally directed to the issue of standing to seek declaratory relief (noting, however, that as Heydon J pointed out in Santos at [36], questions of jurisdiction, standing and hypotheticality cannot be wholly disentangled). This is evident not only from its own terms (and also the terms of the immediately succeeding paragraph), but also from the fact that it appears immediately after a heading in the judgment: “Standing to seek a declaration”. Equally importantly, however, that passage affirms the well established principle that declaratory relief should only be given where it will have foreseeable consequences for the plaintiff because they will be able legally to enforce their rights, legal interests or liabilities, subject to exceptional cases, of which Ainsworth and Plaintiff M61/2010E v The Commonwealth of Australia (2010) 243 CLR 319; [2010] HCA 41 are examples.

594. For all these reasons, we consider that the primary judge erred in making Order 13.

595. For completeness, on one view, the wording of Issue 15 did not fully reflect Berkley’s claim that the primary judge erred in not accepting its limitation defence. For similar reasons to those given above at [494] and also noting Berkley’s success on other parts of Issue 15, it is unnecessary to determine this matter.

Issue 14: Did the primary judge err in making the declaration against Arch/Dual based on her Honour’s findings and the failure to deal with the submissions summarised at J[623]?

596. This issue, which relates to that part of Order 13 concerning Arch/Dual, arises from J[623], where the primary judge summarised the position of Arch/Dual concerning the declaration as initially sought by CIMIC and the subsequent alternative declaration:

“Arch and Dual’s position was applicable to both forms of the declarations. They submitted that any declaration against them is pointless, because, even if CIMIC could otherwise succeed against the 2010 Insurers, Arch and Dual’s exposure will not be reached because they are too high up in the tower. That submission depends on CIMIC failing to demonstrate that all the Costs claimed, including the Gregg Prosecution Costs, fall within the operation of the 2010 Policy. Arch and Dual resist being liable for the Gregg Prosecution Costs that only arose after the conclusion of the 2010/11 Policy period. However, it was accepted that if I found a connection between the Gregg Prosecution Costs and the circumstances surrounding the Iraq File Note, then the Deeming Clause (cl 5.4) would capture those costs.”

597. Although the primary judge summarised in broad terms at J[623] some of the grounds raised by Arch/Dual in opposing both the initial and alternative forms of the declaration sought by CIMIC, her Honour did not explain in her primary judgment why those submissions were not accepted. As previously mentioned, her Honour did not publish separate reasons for judgment explaining the orders made on 12 October 2022 including Order 13. This was so notwithstanding that the parties had availed themselves of the opportunity to make detailed written submissions after the primary judgment was published on the form of final orders. Those written submissions included supplementary submissions made by Arch/Dual with the Court’s leave below which responded to an affidavit dated 22 August 2022 by CIMIC’s solicitor Mr Jonathan Light. This affidavit was provided in conjunction with CIMIC’s written submissions on final orders. CIMIC relied upon the affidavit in response to Arch/Dual’s claim that declaratory relief against them would be purely hypothetical because the 2010 Sixth Excess Policy which Arch/Dual held with Leighton would not be triggered. We will return to address this matter below.

598. Before doing so, however, it is appropriate to note that, in her separate Costs Judgment, the primary judge briefly touched upon Arch/Dual’s opposition to the grant of declaratory relief. In concluding that there should be no order as to costs between Arch/Dual and CIMIC, her Honour reasoned as follows at J[154]-[157]:

“[154] Arch/Dual submit that CIMIC knew the Arch/Dual layer would never be reached for a few reasons. First, because in August 2021 CIMIC did not consider Arch/Dual would be liable to CIMIC on a “worst case scenario”. I do not consider the pre-litigation correspondence about estimated “worst case scenarios” determines the matter. CIMIC did amend its claim after that correspondence to include the Gregg Prosecution Costs, which increased the total indemnity sought.

[155] Secondly, Arch/Dual say their layer would only be relevant if the Gregg Prosecution Costs ought to be indemnified by the 2011 Insurers, or the 2010 Insurers if a later claim was made under the 2010 Policy. Arch/Dual then submit that because it was found that the Gregg Prosecution Costs were to be borne by the 2013/14 Policy, those costs could not form part of a claim for indemnity from the 2010 Insurers, and therefore Arch/Dual could never be liable.

[156] While it is correct that future costs flowing from the Iraq File Note, such as potential prosecutions of former executives, were not part of CIMIC’s case against the 2011 Insurers, had it been found that the 2011 Insurers were liable to indemnify CIMIC for all the losses claimed, the indemnity would be ongoing and further losses could be sought if, and when, incurred. Any claim made against the 2010 Insurers would need to be considered, if, and when, such a claim is made.

[157] Had Arch/Dual considered there was no practical risk to it in a declaration concerning factual matters being made, a submitting appearance could have been filed, save as to the form of such declaration. I do not accept that CIMIC caused Arch/Dual’s costs and ought be liable for them.”

599. This Court is in as good a position as the primary judge to resolve the matters raised by Arch/Dual and which are reflected in Issue 14.

The pleading objections

600. Arch/Dual raised two pleading objections. The first was that no claim had been made on any 2010 or 2011 Insurer in relation to any potential future costs which might provide the basis for a future claim. There were no pleadings, evidence or findings in respect of any such potential future claims. The only payments raised by CIMIC in its pleading were in respect of the 2011 Insurers and comprised the six payments set out in [3] of CIMIC’s further amended summons. CIMIC’s case did not go beyond seeking recovery for those particular amounts (totalling $45.6 million), being payments which had been made by it. Thus the controversy was confined to those six payments and that total amount, not any future claim for indemnity.

601. In oral address on appeal, Mr Jones SC (who appeared for CIMIC together with Mr Ryde) acknowledged that CIMIC’s case against the 2011 Insurers was limited to those six payments. He explained that was because they were the only payments which CIMIC had made to date and in respect of which the 2011 Insurers refused indemnity. He emphasised that nothing in Order 13 is addressed to any payments and that the declaration made there is confined to the question of awareness. He also emphasised that because various prosecutions were ongoing, there was still potential for future claims to be made. It was in this context that CIMIC provided Mr Light’s affidavit.

602. We accept CIMIC’s submissions and reject Arch/Dual’s first pleading objection.

603. Arch/Dual’s second pleading objection was that even if Mr Light’s affidavit demonstrated that their layer could be reached, this was not pleaded as “Loss” below and was not the subject of evidence.

604. As will shortly emerge, having regard to the lack of weight which should be given to Mr Light’s affidavit, it is unnecessary to resolve this matter.

Mr Light’s affidavit and the question whether Arch/Dual’s layer would be reached

605. Arch/Dual contended that there was no controversy between them and CIMIC because if the six pleaded payments were ultimately indemnified by the other 2010 Insurers, the layer applicable to Arch/Dual would not be reached. Accordingly, they submitted that there was no controversy between them and CIMIC as to warrant them being included in Order 13 and insofar as the declaratory relief applied to them, it was hypothetical.

606. In its written submissions below dated 22 August 2022 in support of its proposed orders, CIMIC submitted that Arch/Dual should be covered by the proposed declaratory relief because “a claim may be brought by CIMIC against Arch and Dual for costs which CIMIC is presently aware may be incurred but which have not yet been incurred.” CIMIC relied upon Mr Light’s affidavit regarding the likelihood of CIMIC having to pay further legal costs because of the ongoing prosecution of Mr Savage. In brief, Mr Light claimed that CIMIC was incurring ongoing costs for criminal proceedings arising from the AFP Investigation, including in respect to the prosecution of Mr Savage. Mr Light estimated that Mr Savage’s legal fees to date were “substantial”. He also opined that if the prosecution of Mr Savage went to trial, there would be significant additional costs. Mr Light estimated that the costs of Mr Savage’s defence could exceed $5 million (excluding GST).

607. CIMIC submitted that, having regard to the primary judge’s reasons for judgment dated 27 July 2022 and the finding that neither the 2011 Insurers nor Chubb under the 2013 Primary Policy were liable to pay various costs or amounts totalling $41,553,707 (in respect of the MCI Class Action, the Inabu Class Action and the Inabu Settlement Amount), there was that amount in cover before Arch/Dual’s excess layer was enlivened. Thus that layer would only be reached once approximately $3 million of further liability was incurred by CIMIC. CIMIC then pointed to the Light affidavit, which estimated that the costs of the Savage prosecution could exceed $5 million. On this basis, it submitted that the Arch/Dual layer could well be reached and there was utility in including those parties in the declaratory relief.

608. In their supplementary submissions below, Arch/Dual contended that Mr Light’s affidavit was deficient and should not be relied upon. For the following reasons, we accept their submission that no weight should be given to the affidavit:

1. Mr Light’s estimate that Mr Savage’s legal costs could exceed $5 million was made in circumstances where Mr Light acknowledged that he was not aware of the details of Mr Savage’s defence or the charge out rates of his legal representatives. Thus the basis for his estimate is speculative. This difficulty is not overcome by Mr Light’s brief comparative analysis with the costs incurred by Mr Gregg in his defence. Those costs, which were approximately half of the estimate of Mr Savage’s future legal costs, were then doubled by Mr Light having regard to the longer duration of the proceedings against Mr Savage, the greater complexity of the factual background concerning the Iraq projects and general inflation. Those matters were not further developed by Mr Light. They are expressed at such a high level of generality as to provide little if any guidance or support for accepting Mr Light’s estimate. The matters relied upon by Mr Light are simply unsupported assertions. In these circumstances, his estimate of Mr Savage’s future legal costs should be given no weight.

2. As Arch/Dual pointed out, CIMIC relied on no other evidence to support Mr Light’s opinions or expectations as to the costs of future claims.

609. For these reasons, no weight should be given to Mr Light’s affidavit concerning foreseeable future legal costs. Accordingly, we accept Arch/Dual’s submission that another reason why Order 13 should not have been made against them is that CIMIC’s case against them was hypothetical as there was no evidence that the 2010 Sixth Excess Policy would be triggered.

Whether future claims for costs fell within the 2012 Notification

610. Arch/Dual also contended that any future claims for costs arising out of the AFP Investigation and criminal prosecutions generated from that investigation might fall within the 2012 Notification. This contention was based on the primary judge’s findings at J[367]-[368].

611. This contention was not contested by CIMIC on the appeal. It provides another reason why, assuming contrary to the above that Order 13 was appropriately made, it ought not to have included Arch/Dual.

Issue 16: Did the primary judge err in exercising the costs discretion?

612. The primary judge delivered extensive separate reasons on the issues of costs, having observed that the parties had been unable to reach agreement on any issue, save for AIG and Swiss Re agreeing to bear their own costs of AIG’s cross-claim against Swiss Re.

613. Because we have reached a different view on some of the issues decided by the primary judge, namely, Orders 9 to 11 made on 12 October 2022 (orders for contribution by Berkley to AIG in respect of the Investigation Costs) and the declaration in Order 13, it will be necessary to re-exercise the costs discretion in some respects.

614. However, we take as a starting point the costs orders made by the primary judge. In some cases the primary judge had to determine whether costs should be payable on an indemnity basis having regard to Calderbank offers that had been made. We see no error in the way the primary judge dealt with those questions.

615. The primary judge made the following orders as to costs on 23 June 2023:

“The Court orders that:

1   These costs orders are subject to all costs orders already made in the proceedings, including the following costs orders:

(a)   order 1 made by Justice Ball on 19 October 2021;

(b)   order 2 made by Justice Hammerschlag on 31 January 2022;

(c)   order 2 made by Justice Ball on 11 February 2022;

(d)   order 1 made by Justice Peden on 9 May 2022; and

(e)   order 1 made by Justice Peden on 19 May 2022.

CIMIC’s claim

2   CIMIC pay:

(a)   90% of AIG’s costs of the proceedings on an ordinary basis up to and including 14 May 2022, as agreed or assessed; and

(b)   AIG’s costs of the proceedings after 14 May 2022 on an indemnity basis, as agreed or assessed; and

(c)   interest on the costs referred to in orders 2(a) and 2(b), calculated at the Court rates from the dates on which the costs were paid by AIG.

3   CIMIC pay:

(a)   90% of Chubb’s costs of the proceedings on an ordinary basis, as agreed or assessed; and

(b)   interest on the costs referred to in order 3(a), calculated at the Court rates from the dates on which the costs were paid by Chubb.

4   Chubb pay:

(a)   10% of CIMIC’s costs of the proceedings on an ordinary basis, as agreed or assessed; and

(b)   interest on the costs referred to in order 4(a), calculated at the Court rates from the dates on which the costs were paid by CIMIC.

5   CIMIC pay:

(a)   Catlin’s costs of the proceedings on an ordinary basis, as agreed or assessed; and

(b)   interest on the costs referred to in order 5(a), calculated at the Court rates from the dates on which the costs were paid by Catlin.

6   CIMIC pay:

(a)   Liberty’s costs of the proceedings on an ordinary basis up to and including 9 October 2020, as agreed or assessed;

(b)   Liberty’s costs of the proceedings after 9 October 2020 on an indemnity basis, as agreed or assessed; and

(c)   interest on the costs referred to in orders 6(a) and 6(b), calculated at the Court rates from the dates on which the costs were paid by Liberty.

7   No order as to costs between CIMIC and each of Berkley, Swiss Re, Zurich and Arch/Dual.

AIG’s cross-claim

8   Berkley pay:

(a)   AIG’s costs of AIG’s cross-claim against Berkley on an ordinary basis, as agreed or assessed; and

(b)   interest on the costs referred to in order 8(a), calculated at the Court rates from the dates on which the costs were paid by AIG.

9   No order as to costs between AIG and Swiss Re.”

616. The reason CIMIC was ordered to pay 90% and not 100% of AIG’s costs up to 14 May 2022 was that AIG failed in its opposition to CIMIC’s claim in respect of the Investigation Costs (Costs Judgment at [58]). Costs were awarded on an indemnity basis from 14 May 2022 for all of AIG’s costs on the basis of a Calderbank offer whereby AIG offered to pay $3 million inclusive of costs and interest. AIG substantially bettered that offer when it was held liable to pay only the Investigation Costs plus interest. That finding has been upheld. Order 2 should not be disturbed.

617. Order 3 concerning the costs payable by CIMIC to Chubb was made on the same basis as the order for costs payable by CIMIC to AIG except that Chubb had not made a Calderbank offer or offer of compromise. Order 3 should not be disturbed.

618. Order 4 was made on the basis of the primary judge’s finding that Chubb was liable under its 2013/14 policy for costs described as the “ASIC Non-Iraq Investigation Costs” and the “Gregg Investigation Costs” which (with interest) exceeded $3 million. There was no appeal from that finding, nor from Order 4.

619. Order 5 required CIMIC to pay Catlin’s costs on the ordinary basis. That order followed because Catlin’s First Excess Policy did not respond due to the failure of CIMIC’s Company Securities Claims. The primary judge found that Catlin was not entitled to its costs on an indemnity basis after having served a Calderbank offer because it was not unreasonable for CIMIC not to have accepted the offer. Catlin does not challenge that finding. Accordingly, Order 5 should not be disturbed.

620. Order 6, which provides for part of Liberty’s costs to be payable on an indemnity basis, was made on the basis of a Calderbank offer made by Liberty. There is no basis to disturb Order 6.

621. Order 7, that there be no order as to the costs between CIMIC and the 2010 Insurers, must be set aside because the declaration in Order 13 is to be set aside.

622. Order 8 must also be set aside because Berkley’s appeal against the order for contribution obtained by AIG is to be allowed.

623. Order 9 was made by consent and should not be disturbed.

Berkley’s complaint of procedural unfairness

624. An additional issue, not raised specifically in the Agreed List of Issues, is Berkley’s complaint both below and on appeal that the granting of any form of declaratory relief against it would involve procedural unfairness. It identified the procedural unfairness as arising from the primary judge’s refusal to allow it to cross-examine Mr Wild and it being afforded only a limited time to ask non-leading questions of Mr Stewart regarding the matters contained in the Iraq File Note. In oral address on the appeal, Mr Walker SC (who appeared for Berkley alongside Mr Friedgut) candidly acknowledged that Berkley’s procedural fairness case was a “tall order” because the appeal was a “rehearing”. Nevertheless, the complaint of procedural unfairness was pressed and Berkley maintained it was proper for it to seek to elicit from cross-examination of those two witnesses the nature and extent of their awareness of matters which might trigger the operation of cl 5.1.

625. For the following reasons, Berkley was not denied procedural fairness. First, it is evident that in the course of the trial Berkley did not ultimately press its application to cross-examine Mr Wild. Its request to cross-examine him was opposed by AIG’s senior counsel, Mr Rich SC. AIG then proceeded to cross-examine Mr Wild and Berkley made no further application to do so. In the course of an exchange with the primary judge as to whether evidence adduced in the cross-examination of Mr Wild could be deployed against Berkley, the issue of Berkley cross-examining Mr Wild was raised again. The primary judge asked Mr Friedgut (who was unled in the proceedings below) as to the basis on which he would be entitled to cross-examine Mr Wild. As is evident from Mr Friedgut’s following response, Berkley did not press its request to cross-examine Mr Wild:

“FRIEDGUT:   Only on the basis of questions asked in cross-examination. But if your Honour’s against me in that, I’m not going to take the time of the Court. It purely is in cross-examination. I would not have sought to, had I been asked to cross-examine first, as was originally the application of my friend, Mr Rich. I would have no questions to ask him because there was nothing which would possibly touch on the case of the 2010 Insurers. Unless the inference be drawn. And I don’t even know what the inference could be. But just to guard against that possibility, I’m saying, I’m ready to cross-examine. But if your Honour’s against me, I’m perfectly happy to sit down, your Honour. I’m not going to be pressing the point. I’m simply saying that I will be seeking to clarify matters that were raised in cross-examination. But I’m perfectly happy not to do so.”

626. As to Mr Stewart, Berkley applied to cross-examine him after the 2011 Insurers had finished their cross-examinations. The application was described by Mr Friedgut as a “formal” application to review what Mr Friedgut described as a previous ruling by the primary judge that Berkley did not have a right to cross-examine Mr Stewart. But as senior counsel for both CIMIC and AIG pointed out, no such ruling had in fact been made. When Mr Friedgut was asked by the primary judge to identify the nature of any cross-examination, he said that it “would go to state of mind” and to Mr Stewart’s understanding as to whether the claim was a genuine claim.

627. Senior counsel for AIG then submitted that what Mr Friedgut really wanted was to lead evidence in chief on the cross-claim and that, if this was permitted, he should not ask any leading questions. The Court granted Mr Friedgut leave to ask non-leading questions of Mr Stewart for an initial period of 15 minutes. That is what then occurred, during which there were numerous successful objections to leading questions put to Mr Stewart. Ultimately, the Court granted Mr Friedgut an additional five minutes to question Mr Stewart, during which time there were numerous successful objections on grounds of relevance.

628. Having regard to all these matters, there is no substance in Berkley’s complaint of procedural unfairness relating to its opportunity to test the evidence of Messrs Stewart and Wild. We accept CIMIC’s submission that Berkley failed to identify with sufficient particularity the scope of its cross-examination of Mr Stewart. Moreover, Berkley has demonstrated no practical injustice which it suffered as a result of the limitations imposed by the primary judge on its questioning of Mr Stewart. Finally, Berkley did not press its request to cross-examine Mr Wild.

629. For these reasons, Berkley’s complaints of procedural unfairness are rejected.

Costs of the appeal

630. CIMIC must pay the 2011 Insurers’ costs of its cross-appeal in the Berkley Appeal in which it challenged the primary judge’s findings concerning the 2011 Insurers’ liability for the Company Securities Claims.

631. CIMIC must also pay the 2010 Insurers’ costs of their successful challenge to the making of the declaration in Order 13.

632. AIG must pay Berkley’s costs of Berkley’s appeal from the orders for contribution against Berkley.

633. Chubb must pay the costs of its NOA.

634. In the court below, some parties sought special costs orders on the basis of Calderbank offers. We do not know whether any party will rely on those offers or any later offers for special costs orders with respect to the issues in this Court.

635. The parties should confer and endeavour to reach agreement as to the costs of the issues in this Court in accordance with these reasons.

636. We further order that within 28 days the parties provide the Court with consent orders as to the costs of the issues in this Court, to the extent agreement has been reached.

637. To the extent agreement as to the costs of the appeals, cross-appeals, and NOCs has not been reached, within 28 days the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party’s submissions on the issues in contention.

638. Subject to any contrary order, any disputed issue as to costs will be dealt with on the papers.

Orders

639. For these reasons, we make the following orders:

1. Zurich Appeal (2022/00334409)

1. Zurich’s appeal allowed in part.

2. CIMIC’s cross-appeal dismissed.

3. AIG’s cross-appeal dismissed.

2. Berkley Appeal (2022/00334264)

1. Berkley’s appeal allowed.

2. CIMIC’s cross-appeal dismissed.

3. Arch/Dual Appeal (2022/00335502)

1. Arch/Dual’s appeal allowed.

4. Chubb Appeal (2022/00336236)

1. Chubb’s appeal dismissed.

5. Set aside Orders 9, 10, 11 and 13 made on 12 October 2022 and Orders 7 and 8 made on 23 June 2023.

6. In lieu thereof order that:

1. Subject to the relief granted by Orders 2 to 5 made on 12 October 2022 and Orders 1-6 and 9 made on 23 June 2023, CIMIC’s further amended summons dismissed with costs.

2. AIG’s first cross-claim against Berkley dismissed with costs.

7. Within 28 days hereof the parties provide the Court with consent orders as to the costs of the proceedings in this Court, to the extent agreement has been reached.

8. To the extent agreement as to the costs of the appeals, cross-appeals, and notices of contention has not been reached, within 28 days hereof the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party’s submissions on the matters in contention concerning costs. The issues of costs will, subject to any contrary order, be dealt with on the papers and without a further hearing.

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Amendments

18 September 2024 - Update to coversheet

09 April 2025 - Amendments to fix typographical errors in [90], [156]-[157], [160]-[162], [234], [279], [281], [294], [385], [424], [430], [474], [581], [606], [615].

Decision last updated: 09 April 2025