701 Aggregations. Spotting when many insurance claims are treated as a single pack

In Spire v Royal & Sun Alliance the Court of Appeal held that over 700 claims of the victims of surgeon Ian Paterson should be aggregated as a single claim for the purposes of the hospital’s liability policy.

Spire runs a number of private hospitals where Ian Paterson, a Consultant Breast Surgeon, operated. Over 700 of Paterson’s patients claimed that he had carried out unnecessary and inappropriate operations. Those claims were settled by Spire for a payment of £26.95 million into a compensation fund.

The schedule to Spire’s insurance policy stated that the coverage limits were £10 million for any one claim, and £20 million for all claims. A proviso in the policy referred back to the Schedule but described the lower £10 million limit as applying to all claims “consequent on or attributable to one source or originating cause”. The insurer argued that this wording meant that each of the over 700 claims should be aggregated as one claim, so the lower £10 million limit would apply. Spire argued that the aggregating language in the proviso should not be read into the Schedule, which only referred to one claim. Thus each of the 700 claims was a separate claim, and so the full £20 million limit was available.
The Court applied existing case law to approach the construction of the policy on basis that: the words in the schedule and the proviso must be given equal weight; the reasonable reader is a sophisticated assured, assisted by professional advice; in construing aggregation wording there is no presumption in favour of either width or narrowness; words such one source or one originating cause connote a wide form of aggregation clause; and that the contra proferentem rule only has a role in cases of “real doubt”.

Applying those principles, the Court held that the proviso intended to introduce aggregation wording into the concept of a claim, and thus the reference to one claim in the schedule was to be read in light of the aggregation wording. All of the over 700 Paterson claims against Spire arose from the same source or originating cause (Mr Paterson), and therefore were one claim for policy purposes, and thus Spire was limited to recovering £10 million under the Policy.