Our October 2015 newsletter ‘English court decision considers aggregate claims’ discussed the case of AIG Europe v OC320301 (formerly the International Law Partnership LLP)1 in which the Commercial Court of England and Wales considered whether individual claims brought by 214 investors who allegedly lost in excess of £10 million due to a failed scheme developed by the insured law firm, should be aggregated as one claim under the aggregation clause in the firm’s professional indemnity policy.

At first instance the Commercial Court found that in order for the aggregation clause to apply, the transactions had to be ‘dependent’ on one another. It was common ground that the individual transactions were not conditional or dependent on each other and the insurer was unable to aggregate the claims in order to limit its liability for all the claims to the £3 million policy limit per claim.

The insurers appealed that decision in AIG Europe v OC320301 LLP.2 The matter has now been remitted back to the Commercial Court to be reheard with regard to certain guidance provided by the Court of Appeal.

Commercial Court decision

At first instance the Commercial Court had to consider whether the claims brought by the investors were to be treated as one claim pursuant to the standard aggregate claims provision contained within the solicitors’ professional indemnity policies.

The relevant aggregation clause was as follows:

‘The insurance may provide that, when considering what may be regarded as one Claim for the purposes of the limits contemplated by clauses 2.1 and 2.3:

a. All Claims against any one or more Insured arising from:

i. one act or omission;

ii. one series of related acts or omissions;

iii. the same act or omission in a series of related matters or transactions;

iv. similar acts or omissions in a series of related matters or transactions; and

b. All Claims against one or more Insured arising from one matter or transaction will be regarded as one Claim.’

The insurer argued that the claims by the individual investors were to be aggregated, or at least aggregated in reference to each investment site (Morocco and Turkey) to which the investments related.

The Commercial Court found as follows:

Similar acts or omission

Justice Teare found there had to be a real or substantial degree of similarity rather than a fanciful or insubstantial degree of similarity.

The claims satisfied this test, being that they all involved the local property development company failing to pay the vendors of the respective land causing the investors’ monies to be released and exposed to losses in the event that the developments failed, and the firm’s scheme (designed to prevent this loss) failing to provide security for the investors as intended.

In a series of related matters of transactions

Having regard to the context of the clause being an aggregation clause in a solicitors’ professional indemnity insurance policy, the court held that to be in ‘a series of related matters or transactions’ the transactions alleged had to be dependent on others.

The court found that the individual transactions did not have that requisite dependence on each other and therefore this limb of the clause failed.

The individual claims could therefore not be aggregated and the insurers were unable to limit their liability to the £3 million policy limit.

Court of Appeal

The appeal turned on the meaning of the phrase ‘series of related matters or transactions’.

The court allowed the Solicitors’ Regulatory Authority to intervene in the proceedings, who submitted that the clause required a relationship between the matters or transaction and that there had to be at least some ‘intrinsic connection’ between the relevant matters or transactions, rather than merely a connection with some external common factor such as the fact the transactions were conducted by the same solicitor or both related to the same geographical area.

The court agreed with this approach, finding that there must be an intrinsic, rather than a remote, relationship between the transactions. In other words, the transactions themselves must be related rather than a relationship with some outside connecting factor, even if that extrinsic relationship is common to the transactions.

The court indicated that transactions which all take place with reference to an area of land (such as the Morocco or Turkey developments) may be related transactions if they also refer to or envisage one another. On the other hand, if the relevant transaction is the payment of money out of an account which exposes two or more investors’ money to loss, it will not necessarily follow that those transactions will be intrinsically related simply by virtue of the fact they relate to the same parcel of land.

Ultimately, the Court of Appeal found Teare J went too far by holding that the transactions had to be ‘dependent on each other’ before aggregation could occur.

Influencing the court’s decision to require an ‘intrinsic relationship’ before finding ‘related transactions’ was the fact that the express language of the clause deliberately avoids any of the available (and commonly used) wide formulations such as ‘any claim or claims arising out of all occurrences… consequent on or attributable to one source or original cause’.

The court decided that there must be some restriction on the concept of relatedness and the most satisfactory approach is that the relationship must be intrinsic rather than extrinsic.


The court conceded it was in no positon to make any findings of fact in regard to the transactions and the aggregation clause because it had not heard any detailed submissions about the contracts between the law firm and the investors.

The court considered that if the contracts in respect of one investor referred to the contracts of the other investors, there might be the relevant intrinsic relationship, however if they do not, there may not be. The court opined that a requirement that investors’ funds were to be held in separate designated accounts might militate against a finding that there was an intrinsic relationship between the relevant matters or transactions for the purpose of the aggregation clause.

Ultimately the question of whether the transactions could be aggregated could only be answered having regard to the facts of the case and in particular, the wording of the contracts, and it was therefore appropriate to remit the matter back to the Commercial Court to decide with the assistance of the Court of Appeal’s judgment.

The court commented that the new focus of the factual inquiry being whether there was a series of matters or transactions which were intrinsically, rather than extrinsically related, may have some influence on how one should look at ‘similar acts or omissions’ (the first limb of the clause that was not in issue in the appeal), and accordingly the parties were at liberty to present arguments as to whether the relevant acts or omissions of the firm were similar acts or omissions.


The Commercial Court will make the final decision as to whether the 214 individual claims should be aggregated under the policy, however the Court of Appeal has now confirmed:

  1. The true construction of the words ‘in a series of matters or transactions’ requires the matters or transactions to have an intrinsic relationship with each other (rather than an extrinsic one); and
  2. The judge at first instance was wrong to require the transactions be dependent on each other.


The Court of Appeal’s decision to limit ‘related transactions and matters’ to those that are intrinsically related has broadened the potential operation of the aggregation clause from the narrow ‘dependence test’ at first instance.

It remains to be seen whether the transactions will satisfy the intrinsic relationship test so as to trigger the aggregation clause, with the decision depending on the individual contracts between the investors and the law firm, as well as any interrelation between the accounts used in the failed scheme and the treatment of the investors’ money.

The importance of this decision lies in the wide spread use of this aggregation clause which is applicable to all English and Welsh solicitors’ professional indemnity policies pursuant to the Solicitors Act 1974 (UK), and is of interest to any other insurers whose policies have similar wording.