In August 2015, Mr Justice Teare rejected AIG Europe’s attempt to aggregate indemnity claims and save itself £8m in payments to out-of-pocket law firm clients. This is likely to be of significant assistance in Penningtons Manches’ professional negligence lawyers' claims for over 100 investors in the failed Jewel of the Sea and El Caribe holiday developments in Calabria, where there is a further important hearing to quantify clients’ losses at the end of October.
David Niven, who leads the team acting on this case, scored a High Court victory against Giambrone & Law, the solicitors acting for the developers in July 2015 but the fight goes on for the claimants as Giambrone and his professional indemnity insurers, AIG, say that there is no insurance money left for the hundreds of outstanding claimants.
AIG is also alleging an entitlement to aggregate the claims, the result of which would be an insufficient level of indemnity in the event that the defendants cannot themselves satisfy any judgments obtained.
The AIG Europe v OC320301 LLP & Ors case involved a large number of claims against The International Law Partnership LLP, by investors and prospective buyers of properties in Marrakech and Turkey. AIG Europe had sought a declaration that the limit of indemnity for all claims under its policy with the now defunct International Law Partnership LLP be capped at £3 million.
Mr Justice Teare rejected AIG’s argument that all the claims should be aggregated under the wording of the solicitors’ minimum terms and conditions, which set the minimum standards of cover all insurers should provide.
He said: “The underlying claims are not to be aggregated as one claim. They arise out of similar acts or omissions but the acts or omissions are not in a series of related transactions because the terms of the transactions are not conditional or dependent upon each other. The acts or omissions are not therefore in a series of related matters or transactions.”
As there are many similarities between the cases, Niven welcomed Mr Justice Teare’s rejection of AIG’s position and said: “This is the first case to consider aggregation under the SRA Minimum Terms and Conditions (MTC) for solicitors’ professional indemnity insurance and the judgment has set a very important – and favourable - precedent for my clients.”
Where multiple claims are made against a single firm/individual involving similar or the same facts or circumstances, insurers often seek to aggregate those claims and treat them as a single claim.
Aggregation can be of benefit to the insurer because policies often cap the level of cover available in respect of a single claim. Good news for insurers, whose liability may be dramatically diminished; bad news for claimants, whose claims may not be met in full, and also for defendants who will be liable to meet the balance.
In the absence of disclosure of the relevant policy, the minimum terms and conditions provide claimants with limited guidance on aggregation. In essence, a policy can aggregate all claims against any one or more insured arising from one act or omission, one series of related acts or omissions, or the same or similar acts or omissions in a series of related matters or transactions. Equally all claims against any one or more insured arising from one matter or transaction can be treated as one claim.