Professional Liability Guide

CHAPTER 11 – AGGREGATION CLAUSES

Conversely, the Queensland Supreme Court, in considering an aggregation clause in a combined public and products liability policy, found a plumber’s negligent installation of 47 waterproof membranes (which caused water to escape into parts of the houses the membranes were installed in) to be separate claims under the policy, requiring the insured to make 47 payments of its $300 excess. 570 In coming to its conclusion, the Court found the unworkmanlike application of the membrane on each of the occasions could not be described as an ‘ event ’ or ‘ occurrence ’ because it would depart from the ordinary meaning of an event, which is something that has ‘happened at a particular time, at a particular place, in a particular way … an occurrence or an incident’ . 571 Series of events or occurrences Some clauses will aggregate an identifiable series of events or occurrences. The term ‘ series ’ was considered in Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd, 572 where a chemist supplied pregnant women with a pill containing thalidomide. Actions were brought against the chemist on behalf of children born with deformities alleged to be caused by their mother’s ingestion of thalidomide. The chemist’s insurance policy had a limit of $100,000 per claim, which was insufficient to meet the aggregate amount claimed against the insured. The policy provided for aggregation of all claims arising out of all occurrences of a series consequent or attributable to one source or original cause. The Court found that, while the relevant ‘ occurrences ’ were the separate instances of ingestion of the drug by the women, they were attributable to one source or an original cause – namely, the distribution of the drug. A ‘ series ’ was held to be established if the events are ‘ of a sufficiently similar kind following one another in temporal succession ’ and ‘ similar in nature ’. 573 Ultimately, the Court found there had been an occurrence of a series within the meaning of the policy and the claims were aggregated, capping the insurers’ obligation to pay at $100,000. Related series of acts or omissions In Lloyds TSB General Insurance Holdings v Lloyd Bank Group Insurance Company Ltd , 574 a financial product mis-selling claim, approximately 22,000 claims were brought against the policyholder, who in breach of the Financial Services Act 1986 (UK) had failed to ensure its representatives complied with the Life Assurance and Unit Trust Regulatory Organisation’s Code of Conduct. The House of Lords found that to be ‘ related ’, a single act or omission must be the proximate cause of every claim. The insured asserted the breaches satisfied this interpretation of the word ‘ related ’ because the underlying act or omission was the inadequate training of its staff. The Court did not accept this argument, instead finding a general failure to ensure compliance with the Code of Conduct was insufficient, particularly regarding the unique breaches that occurred at different times, by different representatives, and by different means.

570 QBE Insurance Ltd v MGM Plumbing Pty Ltd [2003] QSC 27. 571 Ibid [35]. 572 (1974) 130 CLR 1. 573 Ibid 21. 574 [2003] 4 All ER 43.

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