The Supreme Court has handed down an important judgment on “aggregation” of claims, in a long-awaited ruling.
AIG Europe Ltd v Woodman and Ors [2017] UKSC 18 concerned the question of when indemnity claims can be “aggregated” (treated as a single claim), thus reducing the amount of money paid out by the insurer, AIG, from about £11m to £3m. The case centred on the interpretation of wording in Law Society rules on minimum terms and conditions in indemnity contracts, namely the aggregation of “related matters or transactions”.
Investors who lost money on property developments in Morocco and Turkey brought professional negligence claims against their solicitors. The Supreme Court unanimously rejected the Court of Appeal’s ruling that, for claims to be aggregated, there must be an “intrinsic relationship” between the transactions concerned. Lord Toulson, giving the lead judgment, said there must be an “inter-connection” between the transactions, and they must “fit together”. Determining what is related is an “acutely fact sensitive exercise”, and any analysis must be approached objectively, he said.
The Supreme Court held that, on the agreed facts before it, the insurers could not aggregate the claims.
David Bowman, senior associate at Royds Withy King, which acted for the claimant investors, said: “A precedent has…been established for cases involving solicitors professional indemnity policies that insurers should not try to aggregate together multiple insurance claims which involve many transactions that relate to two or more discrete developments or projects.”
James Turnbull, solicitor at Locktons Solicitors, said the judgment clarifies that “there can be no straightforward clear-cut ‘test’ to determine whether a series of claims can be aggregated”.
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