In the modern Supreme Courtroom selection AIG Europe Ltd v Woodman & Ors  UKSC 18 the court regarded the which means of the text “a collection of related matters or transactions” in an aggregation clause in purchase to determine whether several claims underneath a expert indemnity insurance policies policy could be aggregated. The enchantment was unanimously authorized, and the Supreme Courtroom stated that the relevant wording must necessarily mean that the transactions will have to be interconnected in get to be aggregated.
Teams of investors brought two sets of claims against a organization of solicitors, relating to getaway resort developments in Turkey and Morocco. Two trusts had been developed to keep the investments, with the growth land to be held by them as stability. Promises in negligence ended up brought in opposition to the solicitors organization (acting as trustees), because of to failure to assure that the relevant stability was in place before the project was shut down by regulators. The business had experienced indemnity coverage with the appellant.
The claimants’ losses totalled £10 million, and underneath the pertinent insurance policies coverage, a assert was limited to £3 million. Aggregation of statements was permitted underneath the coverage, providing that the promises arose from “identical acts or omissions in a series of relevant issues or transactions”, beneath the Minimal Phrases and Conditions cl.2.5 (a) (iv) (“the Aggregation Clause”). The insurance provider issued proceedings to get hold of a declaration that the investors’ statements fell to be aggregated and regarded as one claim, minimal to £3 million. The Courtroom of Attractiveness held that an “intrinsic” link between the transactions was essential, instead than a connection involving some other component. Without having an “intrinsic” relationship there could be no aggregation: see our earlier site write-up, right here.
The Supreme Court, when requested to interpret the wording of the Aggregation Clause, rejected the Court docket of Appeal’s tactic. The Court mentioned that aggregation clauses ought to be browse neutrally as they can function in favour of the insurance provider (by capping the complete sum insured) or the insured (by capping the sum deductible for each declare).
To create that the transactions are “related”, a “real connection” concerning the transactions is necessary. The Courtroom held that dedication of any romance concerning the transactions turned on the specifics, and followed Rix LJ in Scott v Copenhagen Reinsurance Co (British isles) Ltd  Lloyd’s Rep IR 696 81 who acknowledged “an training of judgment, not a reformulation of the clause to be construed and applied” was demanded in figuring out whether the transactions ended up linked. The Court docket of Appeal’s narrow definition of “transaction” was criticised, and the Courtroom uncovered that the Aggregation Clause was to be judged objectively, “having the transactions in the round”.
On this foundation, the Supreme Court docket proposed that statements particular to the Moroccan investments could be aggregated, and individually statements particular to the Turkish investments were suitably related, but the two sets of promises could not be aggregated due to the fact the assignments have been separate. However, the parties ended up remaining with the opportunity to have the case remitted to the Business Court docket for further more factual analysis.
The final decision emphasizes that aggregation remains fact particular and also highlights that figuring out whether issues or transactions are connected is merely a problem of setting up a authentic link, with prior notions of exhibiting an intrinsic (as opposed to “remote”) connection, becoming dismissed as the two pointless and inappropriate.