@Savage Smurf
If I am reading your post correctly, then you made a big mistake.
If by 'I decided that I should bring the fight to them' you mean that you decided to launch a sally attack on their beseiging army, then you could not have lost that battle.
Had you chosen instead the Quit and Exit the battle it would have been declared a Draw and you would have kept your city. The only way to lose a sally battle is to allow all your troops to rout.
The passive assault bug only really has an impact if the battle is started by the AI.
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