Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

In Haydon v Lo & Lo (a Firm), 562 the Privy Council considered a similar issue and again identified the underlying factual matrix as being of critical importance, as opposed to the way the claim was formulated (although this was identified as an important starting point). Haydon was concerned with the theft of money and shares by an employee of a law firm from two deceased estates. The 43 instances of monetary theft (from one estate) were treated as one claim for policy purposes, while the theft of various shares from the second estate was considered to constitute a second claim . The Court arrived at its decision after having regard to the different mechanisms of theft from the two different clients. Both Thorman and Haydon were cited with approval by Einstein J in Schipp v Cameron , 563 which concerned claims of negligence made against a solicitor by a client. The complication in Schipp arose because the negligent acts manifested firstly in a joint venture involving the purchase of real estate and then in the sale of that real estate, a separate loan and the purchase of further real estate, on behalf of a single client. Justice Einstein focused on the effect of the negligence and concluded that the acts of the insured solicitor had continued to deprive the claimant of the money she had initially invested in the joint venture and for which she had issued a single demand relevant to a series of problems. 564 Accordingly, his Honour concluded that there was only one claim for policy purposes. Specific policy wordings How an aggregation clause is drafted will ultimately determine the scope of the clause. The fewer requirements to trigger the clause facilitate a more straightforward and likely application. Originating cause Courts have observed that a clause only requiring claims to arise from an ‘originating cause’, which concerns the underlying reason why the losses occur, as opposed to the advent of the losses themselves, opens a wide search for a unifying factor for the losses that a party is seeking to aggregate. 565 Examples of what constitutes an ‘ originating cause ’ include a negligently manufactured product 566 and an employer’s failure to provide adequate training to salespeople, resulting in the mis-selling of financial products. 567 Event or occurrences Slightly more onerous clauses may require the losses subject of the claims in issue to arise from the same ‘ event ’ or ‘ occurrence ’. In this case, a court will assess whether the circumstances of the losses involve such a degree of similarity as to be properly described as being (or arising out of) the same event or occurrence. In Sealion Shipping Ltd v Valiant Insurance Co, 568 a ship suffered three separate mechanical failures. The second and third failure resulted from the one before. The Court, taking a practical approach to causation, found the reality to be that, after the first mechanical failure, ‘ one thing led to another ’. 569 The claims were aggregated and accordingly the insured was only required to pay the one policy deductible for the claims.

562 [1997] 1 WLR 198. 563 [1999] NSWSC 997. 564 Ibid [968].

565 Axa Reinsurance v Field [1996] 1 WLR 1026. 566 Pacific Dunlop Ltd v Swinbank [1998] VSC 154. 567 Countrywide Assured Group plc v Marshall [2003] 1 All ER 237. 568 [2012] 1 Lloyd’s Rep 252. 569 Ibid 272.

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