Court Of Appeal Reaffirms Law On Aggregation Of Claims Pursuant To A "cause" Based Wording

• Published date: 30 March 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Food, Drugs, Healthcare, Life Sciences, Insurance Laws and Products, Reinsurance, Trials & Appeals & Compensation
• Law Firm: Cooley LLP
• Author: Mr Sam Tacey and Mark Everiss

In Spire Healthcare v Royal & Sun Alliance Insurance Ltd [2022] EWCA Civ 17, the Court of Appeal reversed the first instance decision of Judge Pelling QC holding that the two sets of claims in question had in common a unifying factor, such that they should be aggregated for the purposes of the aggregation clause in the policy. The net effect of this decision was that the insured's claim was limited to the '10m per claim limit of the policy (rather than the '20m aggregate limit).

The case concerned claims made against Spire Healthcare in respect of the conduct of a consultant breast surgeon, Ian Paterson. The claims were categorised into two groups: individuals on whom Dr Paterson had performed incomplete total mastectomies and individuals on whom Dr Paterson had carried out unnecessary surgeries. Dr Paterson was convicted of criminal offences, and Spire Healthcare settled the claims made against it for approximately '27 million. It was accepted by Royal & Sun Alliance Ltd (RSA) that Spire was liable in respect of the settlement. The issue between the parties concerned the aggregation clause in the policy and whether the underlying claims should be aggregated and treated as one claim or treated as two.

At first instance, Judge Pelling QC held that the claims should be treated as two claims, such that RSA was liable for the full '20m aggregate limit of the policy. RSA appealed.

The Court of Appeal first set out the relevant principles relating to the aggregation clause in the policy (which allowed for aggregation in respect of all claims "consequent on or attributable to one source or original cause", in relation to which there was little dispute between the parties. The starting point was that the language used in the clause in issue was a well-know formulation intended to have the widest possible aggregating effect (with reference to AIG Europe Ltd v OC320301 LLP [2017] 1 All ER 143; reference was also made to the well-known comments of Lord Mustill in Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026 - "A cause is to my mind something altogether less constricted. It can be a continuing state of affairs; it can be the absence of something happening. Equally, the word 'originating' was in my view consciously chosen to open up the widest possible search for a unifying factor in the history of the losses which it is sought to aggregate"). The Court of Appeal also noted that past authority made it plain that in considering whether losses could be aggregated...