JDA CO. LTD v NIKKYO CO. LTD [2022] NZCA 532

JDA CO. LTD v NIKKYO CO. LTD [2022] NZCA 532 [9 November 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA677/2021[2022] NZCA 532BETWEEN JDA CO. LTDFirst AppellantAND NIKKYO CO. LTDSecond AppellantAND INTEGRITY EXPORTS CO. LTDThird AppellantAND AIG INSURANCE NEW ZEALANDLIMITEDFirst RespondentAND VERO INSURANCE NEW ZEALANDLIMITEDSecond RespondentAND IAG NEW ZEALAND LIMITEDThird RespondentHearing: 6 September 2022Court: Miller, Gilbert and Simon France JJCounsel: P J Napier and H G Holmes for AppellantsP Davies for RespondentsJudgment: 9 November 2022 at 3.30 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The cross-appeal is dismissed.C The appellants must pay one set of costs for a standard appeal on a band Bbasis, with usual disbursements on their appeal only.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] The respondent insurers, led by AIG, declined claims under a marine cargoinsurance policy for typhoon damage to second-hand vehicles awaiting exportfrom Japan. The three appellants, JDA Co. Ltd, Nikkyo Co. Ltd and Integrity ExportsCo. Ltd, are Japanese companies in business as car exporters. They appear asrepresentative plaintiffs for exporters who claim to enjoy cover under the policy.[2] Cover was arranged through Automotive Technologies Ltd (ATL) and itsbroker, Sage Partners Ltd, under a scheme which they developed and offered toinsurers and exporters. The scheme was called AIMS. ATL and Sage administered itin practice, collecting premiums and issuing certificates of insurance.[3] The policy was a marine open policy, under which the insurer agrees inadvance to cover qualifying cargo declared periodically by the owner. In this casedeclarations were to be made monthly, the owner/exporter declaring "the number ofunits/Motor Vehicles received into the Assured's control at the specified Pre ShipmentHolding Yards during the preceding month". Exporters complied by giving noticeto ATL of the vehicles for which insurance was taken, sometimes by providingspreadsheets or completing schedules on ATL's website, and ATL compiled themonthly declarations for Sage, which calculated and invoiced the premiums.The premium was a fixed per-vehicle sum for the entire period of risk.[4] Very large numbers of cars — far more than would be expected in the ordinarycourse of business — were declared by exporters after 4 September 2018, indeclarations for the months of August and September. Many of these vehicles hadsuffered damage in typhoons that struck Japan on 23 August and 4 September 2018.11 Typhoon Cimaron on 23 August and Typhoon Jebi on 4 September 2018. Both struck the Kansairegion.[5] The appellants sought declarations that that the insurers are liable forthe damage.2 They failed in the High Court, Gault J finding that JDA alone hadevinced an intention to take insurance prior to the attachment of risk and none of theinsurers had complied with their obligation, a promissory warranty, to include insuredvehicles in the prescribed monthly declaration.3 The appellants invite us to find thathe was wrong. AIG has cross-appealed, saying that the Judge ought to have found thatATL breached the policy terms in several respects, and further that the appellants hadacted in bad faith.ATL and the AIMS Scheme[6] ATL was described in evidence by one of its directors, Nigel Grindall, as aNew Zealand company which operates five vehicle processing and inspection depotsat major export ports in Japan. It offers services including structural inspection,biosecurity decontamination, odometer readings, "technology solutions" and marinecargo insurance to the international vehicle export industry. Some of these servicesare approved by New Zealand government agencies.[7] In 2010 ATL commissioned Sage to report on the establishment of a marinecargo insurance facility for ATL customers whose cars passed through ATL's Japanesedepots. Geoffrey Manks, a director of Sage, prepared the report. He recommended amarine open policy, which he described in evidence as a floating policy whereby theinsurer is obliged to insure cargo, or a specific type of cargo, for a party or parties.Sage offered a premium cost per vehicle of $9.50, payable regardless of destination orvalue of the vehicle. ATL would provide a declaration at the end of each month simplylisting the number of vehicles ATL had provided a "service" on during the past30 days. The intention was to automatically cover any cargo destined to be handledby ATL. Customers must have either shipped using an ATL service or have been ableto prove that they intend to use an ATL service.2 The specific declarations sought were that the insurers were (a) liable for damage to the secondappellant's vehicles and (b) by declining cover, in breach of the contract of insurance for allrepresented exporters.3 JDA Co. Limited v AIG Insurance New Zealand Limited [2021] NZHC 2912 [Judgment underappeal] at [97].[8] ATL then authorised Sage to seek terms from the insurance market to supportthe proposed scheme, which commenced in 2012. Initially Lumley General Insurance(NZ) Ltd were appointed lead insurers with IAG New Zealand Ltd (trading as NZI)supporting. IAG later acquired Lumley and in 2012 Vero Insurance New Zealand Ltdbecame lead insurer.[9] Mr Manks explained that the "concept" expanded from customers who usedother ATL services. ATL began to offer marine cargo insurance to any exporter. It isunclear when this began. In February 2012 Sage issued a "Marine Cargo Manual"explaining how the scheme worked. The Manual was given to Lumley and IAG.It explained that from 1 March 2012 all vehicles exported from Japan and declared byATL would be covered by AIMS for Institute B clauses.4 B clauses supplied "disastercover" limited to certain named risks including earthquake, volcanic eruption orlightning. ATL customers and "[authorised] third parties" would be offered theopportunity to upgrade to Institute A clauses, which covered all risks, subject to someexclusions.[10] The Manual explained that cover was not subject to any other preconditions orthe completion of any proposal form by the cargo owner. A retrospective monthlydeclaration of vehicle numbers from ATL was all that was required. Cover wouldattach from the time of purchase at auction or the completion of the survey inspectionor delivery to the load port, whichever occurred first. For customers not using ATLservices, ATL and Sage "will discuss this and agree an appropriate stage from whichcover will apply for those customers".[11] The policy with which we are concerned was issued following a proposalissued in May 2014 by Sage to restructure the AIMS scheme to be expanded"[t]hrough our client [ATL]" into the US marketplace. The insurers to whom it wasaddressed were Vero, IAG (trading as NZI), AIG and Starr. AIG became the leadinsurer in June 2014.4 This referred to standard policy wordings originally issued by the Institute of LondonUnderwriters.[12] The proposal explained that cover would be offered on Institute Cargo clausesA and B terms. B cover was to be priced at USD3.50 per vehicle, with pricing to bereviewed after assessing volumes and claims results. It was proposed that while theremight be a lead insurer, Sage itself would take an active role in the management ofthe scheme. The proposal did not link cover to inspection or other services offered byATL.The policy[13] The policy covered the year commencing 1 June 2018. "Assured" was definedin the policy schedule:1. Unless specified to the contrary elsewhere in the Policy, the Policycovers the Subject-matter insured for the transits and/or other insuredrisks and on the conditions named transported by or for the account ofAims Kyosai, ATL America, Inc., Automotive Technologies Limited,trading as AIMS Worldwide, Kiwi Marineand/or their subsidiary or associated or related companies or partiesincluding the shippers/exporters and other customers ofAims Kyosai, ATL America, Inc., Automotive Technologies Limited,trading as AIMS Worldwide, Kiwi Marinefor whom they are arranging insurance on behalf of, or the insuranceof which is under their control unless insured elsewhere prior to theattachment of cover under the Policy.All of the named firms are members of the ATL group.[14] The business of the Assured for purposes of the policy was described asprincipally "buyers, exporters and distributors of [s]econd-hand [m]otor [v]ehicles andany occupation incidental thereto". The evidence does not disclose, and counsel couldnot agree, whether any of the named firms is a vehicle exporter. ATL, at least, is not.[15] However, it is common ground that the policy extends to some other firmswhich are car exporters and to which cover was extended by ATL. The parties disputeabout how far this extension went. AIG says cover was limited to exporters who usedother ATL services. ATL maintains that cover was available to any exporter whetheror not they used its other services. We address this issue at [69] below.[16] The policy covered second-hand motor vehicles for, relevantly, transits andstorage risks within Japan. Cover attached at the place at which the Assured'sinsurable interest first attached anywhere in Japan and continued while the vehicle wasin transit to pre-shipment holding yards, while the vehicle was situated at such yardsup to a maximum of 90 calendar days, in transit from such yards to shipping ports, atsuch shipping ports awaiting shipment, and in transit to destination ports inNew Zealand and elsewhere:3.1 Cover attaches at the place at which the Assured's insurable interestfirst attaches anywhere in USA or Japan and continues3.1.1 whilst the Subject-matter insured is in transit from such placesto pre shipment holding yards (as specified in the PolicyLimits section of the Policy Schedule), and continues3.1.2 whilst the Subject-matter insured is situated at such preshipment holding yards (as specified in the Policy Limitssection of the Policy Schedule) for up to a maximum of 90calendar days, and continues3.1.3 whilst the Subject-matter insured is in transit from such preshipment holding yards (as specified in the Policy Limitssection of the Policy Schedule) to shipping ports anywherewithin USA or Japan pending the commencement of loadingof the Subject-matter insured onto the oversea vessel, andcontinues3.1.4 whilst the Subject-matter insured is situated at such shippingports awaiting shipment, and continues3.1.5 whilst the Subject-matter insured is in transit from suchshipping ports to destination shipping ports anywhere withinNew Zealand and the other specified countries (as specifiedin the Declaration section of the Policy Schedule), includingtranshipment if applicable, and continues3.1.6 in respect of transits to New Zealand only, whilst the Subject-matter insured is in transit from such destination shippingports anywhere within New Zealand to places anywhere inNew Zealand."Pre shipment holding yards" was defined as a place or premises at which a vehicleinsured was temporarily situated following acquisition by the Assured but prior to thecommencement of transit to the port of loading.[17] It appears that Japanese exporters typically purchase second-hand vehiclesat auction. Under these terms cover attaches on purchase and continues until thevehicle reaches its export destination port, subject to a 90-day limit for storage at pre-shipment holding yards. Insured storage was, as Ms Davies put it for the insurers,incidental to transit.[18] The policy's Standard Conditions & Extensions expressly contemplated thatthe Assured would select Institute A or B clauses prior to the attachment of risk:1. Unless specified to the contrary elsewhere in the Policy, the Policycovers:1.1 Where, prior to the attachment of risk hereunder, the Assuredhas elected for coverage to be on an "all risks" basis, then,unless specified to the contrary elsewhere in the Policy, thePolicy covers all risks of loss of or damage to the Subject-matter insured in accordance with the Institute CargoClauses (A)OR1.2 Where, prior to the attachment of risk hereunder, the Assuredhas elected for coverage to be on a "named peril" basis, then,unless specified to the contrary elsewhere in the Policy, thePolicy covers risks of loss of or damage to the Subject-matterinsured in accordance with the Institute Cargo Clauses (B)[19] The policy was subject to a combined single policy limit of USD10 millionand various sub-limits.[20] The policy schedule contained an estimate of the annual premium payable,based on the estimated number of units to be shipped:Premium1. In consideration of the Declaration made by the Assured and acceptedby the Insurer at inception of the Policy, the estimated annual Premiumpayable to the Insurer is specified below:Estimated number of units 28,000x 'B' Clauses per unit Premium rate USD3.80Estimated number of units 4,750x 'A' Clauses per unit Premium rate USD9.50Estimated annual premium USD151,000[21] The declaration said to have been made by the Assured and accepted by theinsurer at inception of the policy is not in evidence. It is unclear whether such adeclaration was ever made. Nonetheless, the premium clause makes clear that therewas a correlation between volumes and pricing, the premium having been calculatedin the expectation that insured vehicles would be shipped in substantial numbers.[22] The policy contained a bound to declare clause:Bound to Declare ClauseIt is a condition of the Policy that the Assured is bound to declare hereundereach and every shipment or sending or risk without exception falling withinthe terms of the Policy whether arrived or not, the Insurer being bound toaccept same up to but not exceeding the Policy Limits.It will be seen that it was a condition of the policy that the Assured declare everyshipment or sending or risk without exception and the insurer had a correspondingobligation to accept the same up to the Policy Limits.[23] Provisions relating to the monthly declarations were found in the policyschedule. Clause 2 stated that:2. Within7 calendar daysof the end of each month, the Assured shall declare to the Insurer thenumber of units/Motor Vehicles received into the Assured's control atthe specified Pre Shipment Holding Yards (as specified in the PolicyLimits section of the Policy Schedule) during the preceding month andthe Insurer shall calculate the Premium payable by the Assuredthereon.[24] Under this provision a monthly declaration was to include vehicles receivedinto the Assured's control at a specified pre-shipment holding yard. Several pointsmay be made about this. First, it was not necessary to include in a given monthlydeclaration vehicles to which cover had attached when purchased at auction anywherein Japan but which had not reached a yard during that month. Second, the policy didnot specify any named yards; rather, "Pre Shipment Holding Yards" was defined tomean "the place or premises at which [an insured vehicle] is temporarily situatedfollowing acquisition by the Assured but prior to the commencement of transit to theport of loading for export". There is no dispute about qualifying yards. Third, thepolicy presumed both that the Assured had acquired insured vehicles and that vehicleswould be received into the Assured's control at a pre-shipment yard, which suggeststhat in this context "Assured" was used to include both the exporter which owned agiven vehicle and the ATL entities which operated the yards into which it was received.[25] The insurer had a right to amend the policy terms and conditions during thecurrency of the policy if at any time the Assured estimated that the actual number ofunits to be insured would fall short of the estimated number of 30,000 by more than20 per cent. We observe that the May 2014 proposal contained estimates of increasingvolumes from an average of 11,000 cars monthly in the 2014 policy year to 43,000 inthe 2016 policy year. In practice volumes never reached anything like this level andthe 2018 policy schedule makes clear that the parties had adjusted their expectations.It appears that but for the upsurge in business caused by the typhoons roughly 30,000vehicles would have been insured under the policy during the 2018 policy year.The significance of this for present purposes is simply that the policy expresslyrecognised a continuing relationship between the number of cars exported and thepremium and other terms of the policy.[26] It is not in dispute that a vehicle covered under the policy which entered aPre Shipment Holding Yard (which we will call a "yard") in a given month, and whichsuffered insured damage there, would be covered if included in the declaration madefor that month. To that extent cover was retrospective.Terms of trade for exported cars[27] It appears that cars exported from Japan are almost always exported onIncoterms CIF (Cost, Insurance, Freight) terms, meaning that the exporter iscontractually obliged to arrange transit insurance.5 So insurance is practicallyobligatory. It likely follows that all vehicles affected by this proceeding would havebeen insured — by some insurer — before export. If insured under AIMS, the exporterwould have paid a per-vehicle premium that covered the entire period of insured risk.5 K S Vishwanath Insuring Cargoes: A Practical Guide to the Law and Practice (WitherbyPublishing Group, 2010) at 107.[28] In practice cover is taken on Institute B clauses for a large majority of vehiclesexported. There is a dispute between the parties about whether the exporter mustalways nominate A or B clauses before risk attaches, the alternative being thatB clauses apply in default of the exporter choosing A clauses. We address this issueat [76] below.AIMS cover in the ordinary course of business[29] In practice an exporter might seek cover from ATL in one of two ways. It mightperiodically notify ATL Japan, by email, of the cars exported during the precedingmonth, giving their identifying details. This was described as a standing orderarrangement. The first and second appellants, JDA and Nikkyo, operated in this way.Or it might go onto ATL's website and arrange cover for specified vehicles.The website required at a minimum the vehicle chassis number and the type of coversought. The third appellant, Integrity Exports, arranged insurance from time to timein this way.[30] At the end of each month ATL Japan would supply ATL's financial controllerin New Zealand with a spreadsheet listing the vehicles to be insured under AIMS.The financial controller would add to this spreadsheet what was described in evidenceas "a small number of vehicles from other companies that use the AIMS programme".The consolidated monthly lists would be sent to an administrator at Sage, again in theform of a spreadsheet giving the number of units shipped and whether cover was underA or B clauses. Sage calculated the premium and the brokerage fee to be deducted,leaving a net amount paid to the insurers.[31] Sage invoiced premiums to ATL, which issued the exporters with certificatesof insurance. Each certificate certified that an identified vehicle was insured by AIGunder and subject to the terms and conditions of the policy. It contained the facsimilesignatures of an AIG and an ATL representative and was to be countersigned bythe shipper. The certificates were negotiable, meaning that they might be enforcedagainst the insurer by any owner of the vehicle.[32] In practice declarations were not always completed within seven calendar daysafter the end of a calendar month, with the insurer's acquiescence.[33] From time to time the insurer learned of unsatisfactory administration by ATL,usually in connection with a claim. Grant Sheppard, AIG's head of marine insurancefor Australia, gave evidence that there were instances where a claim was made for avehicle that had not been the subject of a declaration, or where the number of carsdeclared by the exporter was much higher than had historically been the case. In eachcase the loss adjuster representing the insurer instructed ATL that cars must be declaredin time and exporters could not make claims for cars they never intended to declare.Declarations for August and September 2018[34] The list of vehicles shipped in August 2018 was provided to Sage by ATL on12 September 2018. The list included vehicles that, according to ATL, were expectedto be shipped in August but were written off due to damage caused byTyphoon Cimaron. It also included 628 vehicles that, again according to ATL, wouldhave been shipped in September and included in that month's declaration but whichhad been written off due to damage caused by Typhoon Jebi on 4 September.These were included in the list because they would not now be shipped at all.[35] Sage decided, however, that the 628 vehicles should be included in theSeptember declaration instead. That was duly done on 10 October. Sage duly invoicedATL premiums for all of these vehicles. The premiums were paid.[36] Because Japan had been seriously affected by typhoons during the 2018typhoon season, AIG placed a moratorium on new business. Sage was notified of themoratorium on 28 September. AIG recognised that the moratorium would not applyto cover taken on a business-as-usual basis; rather, it would prevent an influx ofopportunistic business from entities that had not insured previously or had not done soregularly. Nothing presently turns on the moratorium; AIG does not rely on it to denycover for vehicles damaged by Typhoons Cimaron or Jebi.[37] ATL's September declaration contained 27,717 cars, an enormous increase onthe number of approximately 2,500 that would have been expected for that month inthe ordinary course of business. AIG found that 32 exporters had insured cars wherethey had either not insured previously or had previously insured many fewer cars.21,855 cars were being shipped by a single exporter called BeForward which had beenan AIMS customer previously but had stopped insuring at all in its own name.BeForward appears to have sought cover through Moana Blue Ltd, a shippingcompany which is associated with ATL and has access to the AIMS computer system(Mr Grindall is a director and shareholder of both).[38] Another, SK Trading Co, insured 1,438 cars in September when it had neverpreviously insured more than four. A firm called Relation Co insured 173, with itsprevious high being 49. AIG was dismayed to find that, as it saw it, ATL had beenoffering cover outside the ordinary course of business.[39] We were told that many of the claims, including BeForward's, have beenweeded out and BeForward is not now among the represented plaintiffs.Termination of the policy[40] On 26 October 2018 AIG gave Sage 30 days' notice of termination of itsinvolvement in the policy. It asserted that the large number of cars declared hadincreased risk well beyond the level contemplated when the policy had been renewedin June 2018. It observed that ATL was issuing insurance certificates on AIG paperwhich was enforceable against AIG and it expressed concern that AIG might bepresented with certificates for losses totalling more than the policy limit of$10 million. It expressed concern that ATL had refused to engage over the policylimits.[41] Mr Manks unsuccessfully invited AIG to reconsider. He argued that theincreased volumes did not materially change the risk; the policy was still insuring thesame subject matter, during the same transits, collecting a premium per vehicle andsubject to the same excess and policy limits. He acknowledged a "need to tighten upon the timing and basis for declaration of vehicles". He suggested that likely futuredeclarations would be about 4,000 to 6,000 units monthly.The appellantsJDA[42] JDA is a car exporter based in Osaka. The evidence of its president,Yoji Tagami, is that in 2014 he reached an agreement with ATL that it would arrangeinsurance cover for all vehicles exported by JDA. This was a standing order whichworked by JDA giving notice to ATL of all of the vehicles that had been exported inthe previous month.[43] JDA's claim in this proceeding concerned a single car that was purchased on28 July 2018 and entered a pre-shipment yard on 3 August. It was destroyed byTyphoon Jebi on 4 September.[44] The evidence is scant and it was not examined before us. On 12 September —the same date as the ATL declaration for August was made — JDA lodged a claim withAIMS. On 18 September it notified ATL that it was exporting the car and, asMr Tagami deposed, "therefore buying marine cargo insurance for it pursuant to the[s]tanding [o]rder". It is clearly implicit in his evidence that not until he decided inSeptember to export the car did he choose to purchase insurance through AIMS. (Ofcourse the car was already in a yard, but we surmise that its destination, and henceperhaps the choice of insurer or cover, may not have been decided.) ATL invoicedJDA for the premium (according to ATL this was done on 10 October but Mr Tagamisays it was done on 30 September) and it was duly paid. The car was included inATL's September declaration, which as noted was made on 10 October.[45] JDA sued as representative plaintiff for three exporters.Nikkyo[46] Nikkyo is said to be a substantial exporter which uses more than one shippingand logistics firm to export its cars. One such firm was Moana Blue, which advertiseditself as providing a "door to door" service for vehicles exported to New Zealand.The service included biosecurity clearance, structural border inspections, odometerinspection and insurance. Nikkyo had a standing order arrangement with Moana Blueto take insurance through AIMS for all vehicles which it exported throughMoana Blue. In practice it would have the vehicles delivered to the yard, then sendan email attaching a list of the vehicles. Moana Blue staff would input the details intothe AIMS computer system.[47] Nikkyo purchased a number of vehicles for export to New Zealand and hadthem transported to the Moana Blue yard in July and August 2018. It providedMoana Blue with lists of these vehicles in August. A number of the vehicles weredamaged in the yard on 4 September.[48] On 6 September Nikkyo provided ATL with a separate list of vehicles whichhad been delivered to the yard for export prior to the typhoon but which had not beenincluded in prior lists.[49] It appears that all of the cars included in the Nikkyo claim were to be exportedthrough Moana Blue and were in the yard when damaged on 4 September.However, some of them had been purchased and/or delivered to the yard in July.[50] Nikkyo sued as representative for 11 exporters (although it was suggestedbefore us that the claims of some of the exporters are no longer contested).Integrity Exports[51] As noted earlier, Integrity was a spot purchaser of insurance, meaning that itdid not have a standing order arrangement with ATL.[52] Integrity purchased a number of vehicles in June, July and August 2018 andarranged for them to be transported to a yard in Kobe. The vehicles were transportedon various dates ranging from 23 June to 30 August. The yard would provide Integrityintermittently with a list of its vehicles which had entered the yard.[53] Integrity took out insurance itself through the AIMS website. It did not alwaysdo so immediately; sometimes it waited until the shipping schedule was fixed, and itdid not insure vehicles needing repair until the repairs had been completed. It isevident that it did not always declare vehicles in the month in which they entered theyard.[54] Integrity did apply for insurance for a number of vehicles in August and before4 September. ATL duly invoiced it for the premiums. Some cars were damaged on23 August and others on 4 September.[55] Integrity sued as representative for four exporters.The position of represented exporters[56] The pleadings contain some information about the represented exporters,reciting numbers of vehicles and dates of damage. The parties provided an agreedspreadsheet listing all of the many hundreds of vehicles affected by this proceeding.Otherwise nothing is said about the represented exporters' circumstances in thepleadings and evidence. We were not told whether or to what extent they have agreedto be bound by the findings in this proceeding. The Judge was not asked to makespecific findings about them. Our own factual findings extend to the behaviour ofexporters collectively, but we make no findings about individual exporters other thanthe appellants.The High Court judgment[57] Gault J reached the following conclusions. First, he found that the policy didnot require that exporters be customers of ATL for services other than insurance.6He found that all three plaintiffs were Assureds under the policy; each was ashipper/exporter for which ATL was arranging insurance.7[58] Second, the Judge found that the policy required the Assured to elect the termsof cover — Institute A or B clauses — prior to attachment of risk.8 However, he foundthat, whether through estoppel or interpretation in context, Institute B clauses wouldapply in the absence of an express election to take "all risks" cover.96 Judgment under appeal, above n 3, at [42].7 At [43]–[46].8 At [61].9 At [61].[59] Third, the Judge found that "[a]n open marine policy involving subsequentdeclarations does not dispense with the need to evince an intention to take insurancein the first place".10 The need for such intention was inherent in the AIMS scheme.He rejected the appellants' argument that ATL was acting as the agent of the insurersand was authorised to bind them to cover without communicating to insurers anintention to take insurance. ATL was arranging insurance on behalf of exporters. It didso via its broker, Sage, and it is well-established in marine insurance that a broker isnot the agent of the insurer. At most, ATL was authorised by insurers to bundle theinstructions and monthly declarations of each Assured. It was necessary that intentionto take insurance be communicated to insurers prior to attachment of risk.11[60] No issue would arise in the case of spot orders made prior to attachment ofrisk, but the parties agreed that an established course of business in which insuranceis taken out based on a standing order would suffice.12[61] On the facts, the Judge found that JDA and Nikkyo both had standing orderswith ATL.13 There was sufficient evidence of JDA's intention to take insurance priorto the attachment of risk with respect to the single vehicle affected by its claim.14The position was otherwise for Nikkyo and Integrity. The Judge found that:[67] Mr Sera acknowledged that NCL did not ship all its vehiclesthrough MBL. Until NCL nominated a vehicle as being one for shipment byMBL, it did not fall under the arrangement with MBL. Mr Yamada of MBLsaid the timing of the order depended on the exporter: some exporters wouldplace an order with MBL immediately after purchasing a vehicle at auction,others would order once the vehicle had been delivered to the holding yard forshipping by MBL, and others would order when a vehicle had been sold to aNew Zealand consignee. He said MBL would input this information into theAIMS website operated by ATL at the beginning of each month. The Carchronology indicated that some vehicles were booked with MBL weeks afterentry into a yard, with insurance orders received by ATL weeks after that.The issue is whether this arrangement that required NCL to nominate a vehicleas being one for shipment by MBL is sufficient to give rise to an establishedcourse of dealing. The nomination occurred after purchase, sometimes weeksafter. Even though insurers have accepted other NCL claims, I do not considerthis arrangement sufficiently evinces NCL's intention to take insurance priorto the attachment of risk.10 At [62].11 At [63].12 At [62].13 At [64] and [66].14 At [64]–[65].[68] In relation to Integrity, Mr Tanaka of Integrity gave evidence of takingout insurance for specific vehicles that it was shipping through ATL using theAIMS website. Integrity also nominated the type of cover when entering aninsurance order on the AIMS website. These spot orders were received byATL after purchase, consistent with the prevalence of only insuring vehiclesexported on a CIF basis. There was no standing order. Unless there was anestablished course of dealing, the required intention to take insurance was notcommunicated to insurers until they received each declaration, which was wellafter attachment of risk. Even though insurers accepted claims for 24 ofIntegrity's vehicles, I do not consider the individual declarations amount to anestablished course of dealing evincing an intention to take insurance prior tothe attachment of risk.[62] Fourth, the Judge found that, when read with the bound to declare clause,the premium clause, which we have set out at [23] above, was a promissory warrantyfor the purposes of s 34 of the Marine Insurance Act 1908.15 A promissory warrantymust be exactly complied with, whether it is material to the risk or not, andnon-compliance discharges the insurer from liability as from the date of breach.Section 11 of the Insurance Law Reform Act 1977 (the 1977 Act) did not apply,because that provision is confined to exclusions or limitations.16 Nor were theexporters saved by the errors and omissions clause, which provided that unintentionalerrors or omissions in a declaration did not invalidate the policy.17 Finally, the insurershad not waived compliance with the requirement for monthly declarations.18[63] The Judge accordingly found that there was a breach of warranty where thevehicle in issue was not included in the declaration for the month in which it enteredthe pre-shipment holding yard. In the case of JDA, its vehicle entered the yard on3 August 2018 and was omitted from the 12 September 2018 declaration in breach ofwarranty.19 More generally, the plaintiffs were not entitled to cover for vehicles whichentered a pre-shipment holding yard in or before July 2018 but were only declared on12 September 2018, or for vehicles which entered a yard in or before August 2018 butwere only declared on 10 October 2018.[64] The appellants argued that the insurer's liability arose before the date of anybreach of warranty. As noted earlier, the JDA vehicle had been destroyed on15 At [86].16 At [87].17 At [92].18 At [76]–[77].19 At [88].4 September 2018, and because it entered the yard in August there would have beenno breach of warranty had it been included the declaration made on12 September 2018. The Judge rejected this argument. He accepted that cover isretrospective once a contract of insurance is formed, but found a contract is formedonly on the making of a declaration that conforms with the policy terms.20[65] In the result, the Judge found for the insurers against all the appellants. For thatreason, he did not find it necessary to address their defence that delays in insuring, orthe act of insuring after loss, evidenced lack of good faith on the part of the Assureds.21The grounds of appeal[66] For the exporters, Mr Napier argued that the Judge erred by:(a) finding that only JDA evinced the requisite intention to take insuranceprior to the attachment of risk to the cover;(b) finding that ATL was not the agent of the insurers for the receipt ornotification of the taking of insurance;(c) finding that the timing of the monthly declaration was a warranty;(d) finding that the errors and omissions clause did not apply to latedeclarations;(e) finding that s 11 of the Insurance Law Reform Act 1977 did not apply;(f) finding that breach of warranty entitled declinature of cover,notwithstanding that liability to pay had already arisen; and(g) finding that the insurers had not waived strict compliance with thetiming of monthly declarations.20 At [89].21 At [96].[67] Because it does not seek any other relief, the cross-appeal is arguably bettercharacterised as a notice of intention to support the judgment below on other grounds.Generally, the insurers resist cover for vehicles owned by exporters who were nototherwise customers of ATL, or for vehicles that ought to have been declared in anearlier month, or for vehicles that the exporter did not intend at the attachment of riskto insure through AIMS. They take issue with the number of the Judge's findings.Ms Davies argued that he erred by:(a) finding that ATL could make insurance available to entities that werenot its customers for any other service, and therefore that the appellantswere Assureds;(b) finding that an Assured need not elect the terms of cover prior toattachment of the risk, but rather that Institute B clauses would applyby default;(c) finding, in relation to JDA, that it had a standing order to insure allvehicles purchased for export; and(d) declining to decide the allegation of bad faith on the part of theexporters, who were intentionally not insuring their pre-shipment risksand were tying the taking of insurance to their obligations to buyersunder their CIF agreements.[68] We find it convenient to examine the issues in this way:(a) First, we will decide whether the appellants were Assureds.(b) Second, we will decide whether Assureds must evince an intention totake insurance prior to the attachment of the risk, and whether theappellants did so, addressing as we do the questions whether ATL wasthe insurers' agent for this purpose and whether JDA had a standingorder with ATL.(c) Third, we will decide whether the promise to provide monthlydeclarations was a promissory warranty breach of which discharged theinsurers. We will address the arguments that s 11 of the 1977 Actapplies, that liability had already arisen when the obligation to declarewas breached, and that compliance was waived by insurers.(d) Lastly, we explain why we do not think it necessary or appropriate onthe record before us to deal with the insurers' allegation of bad faith.Were the appellants Assureds?[69] Ms Davies submitted that the proposal originally made to insurers was that thecover would be available only to customers of ATL; that is, exporters who used itsother services. The insurers did not know that the plaintiffs were not customers ofATL for purposes other than insurance. That was never drawn to their attention byATL, which was responsible for administering the insurance. The insurers would nothave agreed to ATL on-selling cover to any exporter who wished to take it. The Judgewas wrong to rely on vague and belated evidence of Mr Manks, who claimed he hadhad a conversation with a representative of the insurers in which the possibility ofsourcing business from non-customers was discussed.22 For AIG, Mr Sheppard saidthat he had no knowledge of any such conversation and would expect to have beentold of it had it happened.[70] The Judge reasoned that the wording of the Assured clause (at [13] above) didnot require that the plaintiffs need be customers of ATL other than for the purpose ofbuying insurance.23 He observed that the policy also referred to acquisition of vehiclesby the Assured and attachment of the Assured's insurable interest.24 ATL did not havean insurable interest in the vehicles.25 Nor did the proposal necessarily imply thatinsurance was confined to exporters who are ATL's customer for inspection or22 The evidence was elicited in cross-examination, apparently in response to an amended pleadingwhich the insurers were permitted to file at the commencement of the trial.23 Judgment under appeal, above n 3, at [39]–[42].24 At [40].25 At [40].odometer reading.26 The Judge mentioned the evidence of Mr Manks but did notappear to place a great deal of weight on it.27[71] We are not persuaded that the Judge was wrong. The policy covered theSubject-matter (vehicles) for transits by and for the account of the named ATL entities"and/or their subsidiary or associated or related companies or parties including theshippers/exporters and other customers of" the same entities "for whom they arearranging insurance on behalf of, or the insurance of which is under their control ".This language does not limit "customers" to exporters who also use other ATLservices. It must be borne in mind that we are dealing here not with a dispute betweenATL and AIG, but with claims under the policy by exporters to whom ATL sold coverwith, as Mr Napier submitted, the actual or apparent authority of the insurers. Havingpurchased it, the appellants are undoubtedly customers of ATL. Clear language wouldbe needed to permit insurers to deny their claims on the ground that they had to takeother ATL services as well.Prior intention to insure[72] Mr Napier accepted that the Court must be satisfied that the appellants intendedand had committed to take insurance for the affected vehicles prior to typhoon damage.He contended however that such intention need not be communicated to insurers; andif it must, ATL was the agent of the insurers for this purpose.[73] Ms Davies submitted that the appellants were required to evince an intentionto take insurance prior to attachment of the risk by communicating their intention toinsurers, and this obligation extended to nominating the required terms of cover byaffirmatively electing Institute A or B clauses. Neither ATL nor Sage were agents ofthe insurers for this purpose; in accordance with long-standing marine insurancepractice, they were agents of the Assureds.2826 At [41].27 At [38] and [41].28 Anglo-African Merchants Ltd v Bayley [1970] 1 QB 311 at 322 per Megaw J, referring to Rozanesv Bowen (1928) 32 Lloyd's Rep 98 at 101.Intention to insure with AIMS in fact[74] As we see it, the first question is one of fact; did the appellants intend to insurewith AIMS. This should be assessed at the attachment of risk — not, as Mr Napierwould have it, at any time prior to loss being suffered. This was a policy which wasdesigned to operate in the ordinary course of business, the Assureds being bound todeclare each and every shipment without exception and the insurers being obliged toaccept the same up to the policy limits. Declarations must specify the number ofvehicles received into pre-shipment yards in the preceding month. As we haveexplained, cover attached where the Assured's insurable interest first arose, likely atauction, and extended to transit from such place to the pre-shipment yards.[75] Intention to insure is, as the Judge recognised, a very significant issue inthis case. It is true that most cars are sold on CIF terms, meaning they must be insuredby the exporter, so most of the damaged cars would have been insured prior to beingloaded onto a ship. The premium under this policy is also fixed. But there is evidenceconsistent with a practice of exporters taking insurance and paying the premium onlywhen the vehicle concerned had been sold to an overseas buyer. The dramatic increasein vehicles insured by ATL after the typhoons, and the appearance of exporters whohad not previously or recently used AIMS, suggests that but for the typhoons someexporters would have taken cover with another insurer. Both practices areincompatible with the structure of the parties' bargain, under which open cover wasoffered on terms that the Assureds would declare monthly, and the insurers wouldcover, all shipments that met the policy terms. These obligations were plainly materialto the insurers' assumption of risk under the policy. If freed of them, exporters wouldbe able to select against the interests of the insurers. And if vehicles were not declaredin the declaration for the month in which they entered a pre-shipment yard, the insurerswould not have an accurate measure of their exposure.29The obligation to select Institute A or B clauses[76] Ms Davies submitted that the policy required in clear and unambiguous termsthat an Assured must elect terms of cover prior to attachment of the risk.29 Union Insurance Society of Canton Ltd v George Wills & Co [1916] AC 281 (PC) at 288–289.[77] She pointed to evidence of Mr Sheppard, who drafted the relevant provisions,that a decision had been made to remove wording providing for use of Institute Bclauses in default. He deposed that he wanted insured parties to elect terms of coverbefore suffering a loss. She submitted that the Judge was wrong to accept the evidenceof Mr Manks that the original wording was actually removed because he and anotherAIG employee, Fraser Walker (who did not give evidence), agreed that it wassuperfluous. The Judge accepted Mr Manks's evidence, finding that the partiesproceeded on an assumption that B clauses would apply in the absence of an expresselection to take all-risks cover.30 He appears to have accepted that an estoppel aroseaccordingly.31 He also reasoned that, on a proper interpretation of the policy, B clausesapplied by default.32[78] In our view the purpose of cl 1 of the standard conditions, which we have setout at [18] above, was to define the extent of cover and allow the Assured to elect oneof two forms on offer. The policy contains no process for selecting the form of coverprior to the attachment of risk, either generally or in relation to each vehicle.Rather, cover was secured through the monthly declaration, which was made after therisk had attached. The better reading of the policy, in our view, is that the Assured'sintention to insure when the risk attached must extend to the form of cover, with thatelection being confirmed when the declaration was made. An Assured which selectedA clauses would need to prove, if called on to do so, that it had always intended todo so.[79] Nor are we persuaded that the Judge was wrong to prefer the evidence ofMr Manks that he and Mr Walker agreed that express wording to the effect thatB clauses applied in default was superfluous, and that ATL and AIG thereafterproceeded on that basis. He had the advantage of hearing the evidence. It was notnecessary that he make an adverse credibility finding against Mr Sheppard in order toaccept Mr Manks's account; it was enough that he found Mr Manks reliable andrecognised that Mr Sheppard may not have known of the conversation betweenMr Manks and Mr Walker.3330 Judgment under appeal, above n 3, at [56]–[57].31 At [59].32 At [59].33 At [57].Notification to insurer of intention to insure[80] Gault J found that the intention to take insurance had to be communicated tothe insurers.34 Ms Davies agreed with Mr Napier that there was no policy requirementfor communication to insurers prior to the submission of each monthly declaration.We concur. The questions are whether the Assured intended to insure a given vehiclewhen the risk attached, and on what terms, and whether the Assured subsequentlycomplied with their obligations to declare.[81] It follows that we need not address the argument that ATL and/or Sage wereagents of the Assureds for the purpose of receiving prior notice of an intention toinsure. We record that we accept that in marine insurance practice a broker ordinarilyis the agent of the insured.35 We also accept that Sage acted as the agent of ATL whenthe proposal was made to insurers and the policy terms were negotiated. But ATL isnot a broker and it was responsible as between itself and AIG for the administration ofthe insurance, receiving monthly notifications from exporters, combining them into amonthly spreadsheet which it supplied to Sage and issuing exporters with certificatesof insurance. ATL is not a party to the present proceeding and on the view we take ofthe case we need not define the precise parameters of its agency.36The obligation to provide monthly declarations[82] We have explained that the monthly declarations to the insurers under thepolicy were made by ATL, which consolidated exporters' notifications into aspreadsheet that it sent to Sage, which calculated the premium and accounted to theinsurers. The Judge observed that exporters needed to declare cars to ATL before itcould declare them to the insurers and the ATL declaration acted as the exporters'declaration.37 It is not suggested, so far as we are aware, that there was any mismatchbetween the two.34 At [63].35 See Anglo-African Merchants Ltd v Bayley, above n 28, at 322; Rozanes v Bowen, above n 28, at101; and Empress Assurance Corp Ltd v CT Bowring & Co Ltd (1905) 11 Com Cas 107 (KB) at112.36 Nor is it necessary to consider the application of s 19 of the Marine Insurance Act 1908.37 Judgment under appeal, above n 3, at [75].[83] The first question is whether the monthly declarations must include all vehiclesthat entered pre-shipment yards in that month. If so, we must decide whether theinsurers waived compliance, whether such obligation was a warranty breach of whichreleases the insurer, and whether, if it was a warranty, it was breached after liabilityhad accrued.Must vehicles be declared for the month in which they entered a yard?[84] The short answer to this question is that the policy expressly required thatwithin seven calendar days of the end of each month the Assured must declare to theinsurer the number of vehicles received into pre-shipment holding yards during thepreceding month. Mr Napier did not suggest otherwise, arguing rather that the insurerswaived compliance and that the premium clause in which this language appeared wasnot a warranty.Did the insurers waive compliance with the obligation to declare?[85] Mr Napier noted that a breach of warranty may be waived by the insurer,38 andsubmitted that the insurers did so in this case by meeting claims even when vehicleswere declared late, or a declaration was missed entirely. He sought support in theinsurers' practice of allowing ATL to make monthly declarations after the seven-dayperiod for doing so had expired.[86] It is correct that the insurers did not strictly insist on declarations being madewithin seven days. The Judge found that the August and September declarations weremade on 12 September and 10 October respectively and the insurers took no issuewith that. To that extent, the Judge found, there was a waiver.39 Mr Napier took us toevidence from Sage and ATL suggesting that delays of this kind happened from timeto time. However, we agree with Ms Davies that timing of the declarations is ared herring. The real question is one not of timing but of content. And as the Judgefound and we have noted at [33] above, when insurers became aware of failures todeclare vehicles that had entered yards in the preceding month they complained38 Marine Insurance Act, s 35(3).39 Judgment under appeal, above n 3, at [76].to ATL. The Judge clearly accepted that the insurers did not waive compliance.40We agree. The evidence does not satisfy us that they led ATL to understand they didnot insist on compliance. From the insurers' perspective the obligation to declarewhen the policy required it was important.Does breach of the obligation to declare for the month in which vehicles enter a yardrelease the insurer?[87] We turn to the question whether the obligation to declare is a warranty forpurposes of the Marine Insurance Act, s 34 of which provides:34 Nature of warranty(1) A warranty, in the following sections relating to warranties, means apromissory warranty—that is to say, a warranty by which the assuredundertakes that some particular thing shall or shall not be done, or thatsome condition shall be fulfilled, or whereby he affirms or negativesthe existence of a particular state of facts.(2) A warranty may be express or implied.(3) A warranty as above defined is a condition which must be exactlycomplied with, whether material to the risk or not. If it is not so compliedwith, then, subject to any express provision in the policy, the insurer isdischarged from liability as from the date of the breach of warranty, butwithout prejudice to any liability incurred by him before that date.[88] Generally, the Act implies standard terms into contracts of marine insurance.41Many of these terms can be excluded by agreement. Whether an obligation to declareclause is a warranty is a question of interpretation of the particular policy.42[89] Mr Napier pointed out that the obligation to declare is found in a clause dealingwith the calculation and payment of premium, and it is not labelled as a warranty. If itwas to enjoy the status of a warranty, one would expect it to appear in the bound todeclare clause. He submitted that the errors and omissions clause is inconsistent withit having that status.40 At [77].41 It follows the Marine Insurance Act 1906 (UK), which codified common law of the time.Similar legislation has been adopted in Australia and Canada.42 Compare Union Insurance Society of Canton Ltd v George Wills & Co, above n 29, and GlencoreInternational AG v Ryan [2001] EWCA Civ 2051, [2002] 1 Lloyd's Rep 574 [The Beursgracht].[90] The Judge found that the requirement to declare does not lack prominence inthe policy,43 and he emphasised that this was an open marine policy under which covercould attach on the basis of a standing order before insurers knew the number ofvehicles.44 The obligation to declare monthly was important for that reason, and forreinsurance purposes.45 By way of emphasising its importance, he noted that thebound to declare clause required that the Assured declare each and every shipment orsending or risk without exception.46[91] We have explained that the structure of the parties' bargain was that open coverwas offered on terms that the Assureds would declare monthly, and the insurers wouldcover all shipments that met the policy terms. We recognise that the insurers have notargued that they are excused liability in connection with exporters who did not insureall their exported vehicles through AIMS. The narrative at [33] above suggests theymay have acquiesced in that practice, which resulted in the policy becomingfacultative on the part of the Assured and obligatory on the part of the insurers.47Rather, the insurers have invoked the bound to declare clause for the purpose ofinsisting that all vehicles which exporters intended (at attachment of risk) to insurethrough AIMS were declared in the declaration for the month in which they firstentered a pre-shipment yard. Nonetheless, we accept that the obligation to declare allvehicles which were to be insured through AIMS was material to the insurers. In ourview it was a promissory warranty for purposes of s 34(1) of the Act.[92] We agree with the Judge that the errors and omissions clause does not detractfrom this conclusion.48 That clause provided that unintentional errors or omissions inthe making of declarations should not invalidate the policy provided steps were takento rectify them as soon as they came to the notice of the Assured. The language of theclause recognises that some failings in making declarations might invalidatethe policy. We do not accept Mr Napier's sweeping submission that there was nodeliberate lateness in making declarations. The enormous number of vehicles declared43 Judgment under appeal, above n 3, at [82].44 At [84].45 At [84].46 At [85]–[86].47 See Glencore International AG v Alpina Insurance Co Ltd [2003] EWHC 2792 (Comm) at [263]–[264] for the importance of declarations under such a policy.48 Judgment under appeal, above n 3, at [92].for August and September 2018 indicates that what is in issue here is not unintentionalerrors or omissions, such as an oversight in notifying ATL that a given vehicle hadentered a yard, but rather a practice of exporters keeping their shipping and insuranceoptions open or waiting to sell a vehicle on CIF terms before paying the premium.These practices allowed exporters to select against the interests of the insurers, andthat is exactly what appears to have happened during the 2018 typhoon season.[93] Mr Napier invoked s 11 of the Insurance Law Reform Act, which provides that:11 Certain exclusions forbiddenWhere—(a) by the provisions of a contract of insurance the circumstancesin which the insurer is bound to indemnify the insured againstloss are so defined as to exclude or limit the liability of theinsurer to indemnify the insured on the happening of certainevents or on the existence of certain circumstances; and(b) in the view of the court or arbitrator determining the claim ofthe insured the liability of the insurer has been so definedbecause the happening of such events or the existence of suchcircumstances was in the view of the insurer likely to increasethe risk of such loss occurring,—the insured shall not be disentitled to be indemnified by the insurer byreason only of such provisions of the contract of insurance if theinsured proves on the balance of probability that the loss in respect ofwhich the insured seeks to be indemnified was not caused orcontributed to by the happening of such events or the existence of suchcircumstances.[94] On its face, this may appear inapplicable to s 34 of the Marine Insurance Act,which defines a warranty as "a condition which must be exactly complied with,whether material to the risk or not".49 The 1977 Act provides that nothing in the1908 Act shall limit any provision of the 1977 Act, which prevails in any case wherethey are in conflict.50 There is a question whether the 1977 Act applies to warrantiesthat are incorporated not because the insurer thought the events they address werelikely to increase the risk but because the legislature chose to imply them intothe contract.51 Ms Davies did not invite us to answer it here, perhaps because the49 Section 34(3).50 Insurance Law Reform Act 1977, s 14.51 Robert Merkin and Chris Nicoll Colinvaux's Law of Insurance in New Zealand (2nd ed, ThomsonReuters, Wellington, 2017) at 1342, referring to Harbour Inn Seafoods Ltd v Switzerland Generalevidence suggests the warranty was specifically negotiated. Rather, she argued thatthe warranty was not so defined as to establish a causal connection between its breachand the insured's loss.[95] The question can be framed in this way: did the obligation to declare clauseexclude the insurers' liability on the happening of certain events or on the existence ofcertain circumstances because it was of the view that those events or circumstanceswere likely to increase the risk of loss occurring, so allowing the insured to show onthe balance of probabilities that the loss was not caused or contributed to by suchevents or circumstances?[96] Gault J found for the insurers.52 Mr Napier submitted that this was an error; ifthe clause was a warranty it both excludes and limits the liability of the insurer toindemnify the insured in the event of a late declaration. But the bound to declareclause does not exist because the insurer considered the absence of a declarationincreased the likelihood of loss occurring. We consider rather that the bound to declareclause was, as Ms Davies put it, part of the administrative framework of the policy,allowing the insurers to calculate and invoice the premium, monitor their exposure,assess reinsurance arrangements, and determine in advance of the next renewalwhether the premium remained appropriate.53[97] This conclusion is not inconsistent with our finding that the bound to declareclause was material to the insurers, in the sense that it affected the risk associated withinsured vehicles collectively. As we next explain, in the context of a marine openpolicy the insured's obligation to declare in the applicable month all vehicles which itintended to insure through AIMS went to the question whether a contract was formedat all.Insurance Co Ltd (1991) 6 ANZ Insurance Cases 61-048 (HC); and Womersley v Peacock HCChristchurch CP24/98, 8 September 1999.52 Judgment under appeal, above n 3, at [87].53 Compare the catalogue of facts that have been found material to risk in Merkin and Nicoll, aboven 51, at [18.4.1(2)].Had liability already accrued when the obligation to declare was breached?[98] Mr Napier argued that if the bound to declare clause was a warranty, breachdid not operate to release the insurer because liability had already accrued when theobligation to declare arose. This meant, he submitted, that cover could not be declinedfor vehicles delivered to the yards in August because a declaration was not due until7 September and typhoon damage was suffered on 23 August or 4 September.He submitted that Gault J did not engage with this argument.[99] The Judge held that while cover attaches before a declaration is made, it issubject to a declaration in accordance with the policy terms.54 Absent a compliantdeclaration, no contract was formed. He explained in relation to JDA that liability forthe loss, which occurred on 4 September, would have arisen only if the vehicle wasincluded in the declaration made on 12 September. It was not.55 More generally,vehicles which entered the yards in or before July 2018 could not be included in the12 September declaration, and the same would apply for vehicles which entered theyards in August but were not declared until 10 October.56[100] We consider the Judge was correct. The rule is that where a declaration undera marine open policy does not comply with the terms of the policy no contract wasformed.57 The contract having been formed, cover attaches retrospectively.Conclusion[101] In the result, exporters were covered under the policy if they intended to insurewith AIMS at the attachment of risk and made a timely declaration. We appreciatethat this meant the cover may have had little value for exporters who believed theycould delay the choice of export destination and insurer and the timing of paymentuntil shipping was imminent. But the alternative is that exporters were free to selectagainst the insurers. That is behaviour which, in our view, the policy was structuredto prevent.54 Judgment under appeal, above n 3, at [89].55 At [90].56 At [91].57 Seavision Investments SA v Evennett [1990] 2 Lloyd's Rep 418 [The Tiburon] at 422.The position of each of the representative plaintiffs.[102] We now turn to the circumstances of each of the appellants. We addresswhether each of them intended to insure with AIMS, and whether they were in breachof the obligation to declare warranty.JDA[103] We have referred to the Judge's findings at [61]–[64] above. We record that itwas common ground that a standing arrangement between an exporter and ATL mightsufficiently evidence timely intention to take cover with AIMS and on what terms.[104] Ms Davies challenged the Judge's finding that JDA had a standing arrangementto purchase insurance. Evidence of such arrangement was given by Mr Tagami andMr Grindall, who deposed to establishing such arrangement in 2014. Ms Daviessubmitted that this evidence should be rejected, pointing out that the arrangement wassaid to be oral but a written document was produced at a late stage and the writtenagreement both predated the AIMS scheme and limited the arrangement to cars beingexported on CIF terms. We observe that some of her criticisms related to the obligationto declare, rather than the existence of the standing order.[105] We are not persuaded that the Judge's findings were not available to him.Mr Tagami and Mr Grindall deposed that JDA had a standing arrangement to insureall vehicles it exported. We are not persuaded that the Judge was wrong to accept thatevidence.[106] However, we do accept that the standing order involved JDA giving notice toATL that it had decided to export each car and accordingly wanted insurance.It appears that JDA often exported on CIF terms, so it need not take insurance until asale had been arranged. So JDA's declarations to ATL were not always made in thedeclaration for the month in which a given vehicle entered a yard.[107] It is not in dispute that, as recorded at [43]–[44], JDA made a late declarationfor the single car which is the subject of its claim. The car had entered a yard in Augustand was not included in the declaration for that month. We have agreed with the Judgethat the late declaration was in breach of warranty, discharging the insurers.Nikkyo[108] Mr Napier submitted that Nikkyo intended to take cover through AIMS for allvehicles that it shipped through Moana Blue. Mr Sera and Mr Grindall gave evidenceto that effect. Mr Sera deposed to there being a number of vehicles that had beenpurchased by Nikkyo and entered a Moana Blue yard on various dates in July andAugust. A few more entered the yard in September shortly before Typhoon Jebi struck.[109] We have quoted the Judge's findings at [61] above. He accepted that Nikkyohad a standing arrangement with ATL.58 But it used other exporters, and not until itnominated a vehicle as being shipped by Moana Blue did the standing arrangementapply. It followed that the standing arrangement did not evidence Nikkyo's intentionto take insurance prior to attachment of the risk. Further, the nomination might occurweeks after purchase of a given vehicle.59 He appears to have found that most ofNikkyo's cars were not exported through Moana Blue in practice.[110] We agree with the Judge. The decision to export a given vehicle throughMoana Blue appears to have been made after the attachment of risk, and sometimesweeks later. Until that decision was made it could not be said that the exporterintended to insure through AIMS.[111] It follows that Nikkyo failed to show that it had evinced an intention to insurethrough AIMS when the risk attached in relation to its vehicles. That is so for the carswhich are the subject of Nikkyo's claim in this proceeding, all of which were in theMoana Blue yard when damaged. A decision to insure through AIMS was made whenthese cars entered the yard, where they were subsequently damaged, but that decisionpost-dated the attachment of risk.[112] We note that in some cases Nikkyo was also in breach of the bound to declareclause. Some claims were declined because it had owned the vehicles for more than58 Judgment under appeal, above n 3, at [66].59 At [67].90 days. Mr Sera also acknowledged that some of the cars to which he referred inevidence had entered the yard in July. It is not easy to identify which vehicles enteredthe yard in August and were the subject of a declaration made in September, but it mayhave been as many as 14.Integrity[113] As we have explained, Integrity insured cars on a "spot" basis, going onto theAIMS website to declare them case-by-case. It is evident that Integrity did not insureall its cars through AIMS. There was no standing order, nor was there a sufficientcourse of conduct evidencing an intention to take insurance prior to attachment ofthe risk. The Judge found rather that Integrity declarations were made "well after"attachment of the risk, and its practice was consistent with only insuring vehiclesexported on a CIF basis.60 In short, it cannot be said that Integrity intended to insurea given vehicle through AIMS at the time of attachment of the risk. All that can besaid is that the intention to insure through AIMS was formed by the time that detailswere entered on the website.[114] Mr Napier responded by arguing that Integrity met the definition of Assuredand the insurers were obliged under the bound to declare clause to accept every vehiclethat an Assured declared to them in good faith (prior, we assume, to any damage).We cannot accept this argument. It supposes that Integrity was insuring through AIMSall vehicles that it exported, which is not the case. And we have preferred the viewthat the intention to insure through AIMS must be formed at attachment of the risk.Bad faith[115] As noted earlier, Ms Davies argued that the Judge was wrong to decline toconsider the respondents' claim that the appellants acted in bad faith, contending thathe was obliged to deal with any issue raised.[116] We do not agree that the Judge was strictly obliged to deal with the issue, sincehe had concluded the outcome did not depend on it.60 At [68].[117] Nor do we intend to deal with it, for three reasons. First, we would not beprepared to make findings of this kind when the trial Judge did not address the issue.It might be necessary to descend to per-vehicle analysis. If the outcome depended onit and we were allowing the appellants' appeal to some extent, we would remit theissue to the High Court for decision.[118] Second, we do not find it necessary. We have accepted that the insurers maydecline cover where the exporter did not intend at the attachment of risk to insure thevehicle with AIMS, or where the exporter was in breach of the bound to declarewarranty. The allegation of bad faith appears to add little. Further, the evidence ofbad faith appears to rest in part on the total number of cars declared and the behaviourof exporters and firms other than the appellants. We have explained at [56] above thatour findings are confined to the positions of the appellants. Mr Napier accepted that.He acknowledged that it remains open to the insurers to deny cover to any otherexporter, including those represented by the appellants, whose claims were fraudulentor which chose to insure with AIMS because their vehicles had already been damagedor were thought to be at imminent risk of typhoon damage.[119] Third, so far as the appellants were concerned, Ms Davies confined herself toarguing that because they had withdrawn some claims or accepted declinature theywere "not blameless", which falls short of an allegation that they acted dishonestly.Disposition[120] The appeal is dismissed.[121] The cross-appeal is dismissed.[122] The respondents having succeeded, the appellants must pay one set of costs fora standard appeal on a band B basis, with usual disbursements on their appeal only(not the cross-appeal).Solicitors:Keegan Alexander, Auckland for AppellantsFee Langstone, Auckland for Respondents