Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

Similar acts or omissions in a series of related matters or transactions The standard aggregate claims provision contained within English and Welsh solicitors’ professional indemnity insurance policies was considered by England’s Commercial Court in AIG Europe v OC320301 (formerly the International Law Partnership LLP) . 575 Satisfaction of the clause in question was particularly onerous because as well as requiring the claims to arise from ‘ similar acts or omissions ’, they also had to have been ‘ in a series of related matters or transactions ’. The case involved individual claims lodged by hundreds of investors who lost money due to a failed system devised by the defendant law firm. The scheme was intended to protect their money in property development investments in Turkey and Morocco. The case was appealed, with contentions centred on the meaning of the second limb in the aggregation clause ‘ in a series of related matters or transactions ’. 576 The Supreme Court of the United Kingdom ultimately allowed AIG’s appeal, 577 holding that the word ‘ related ’ simply required a ‘ real connection ’ between the transactions ‘ or in other words they must in some way fit together ’. 578 On that basis, it was held that all the transactions involving the Morocco development were sufficiently inter-connected, and similarly with all the transactions involving the Turkey development. However, the Court accepted AIG’s submissions that it was not the case that all transactions in respect of both developments were inter-connected. Similar act or omission In construing what is ‘ similar ’, the Court ruled that the requisite degree of similarity must be appropriate, having regard to the object of the clause, which was to permit claims to be aggregated for the purpose of applying the limit of the insurers’ liability per claim. In light of this, the Court required the requisite degree of similarity to be a real or substantial degree of similarity as opposed to being fanciful or insubstantial. All the claims involved (i) the local development company failing topay the vendors of the respective land, (ii) the investors’ monies being released and exposed to losses if the developments failed, and (iii) the firm’s scheme failing to provide security for the investors. While the appeal did not turn on the meaning of ‘ similar acts or omissions ,’ the Court did permit the parties to present arguments on the meaning of this limb of the clause, having regard to the new focus on an ‘ intrinsic relationship ’ between the matters or transactions, as discussed below. In a series of related matters or transactions TheCommercial Court said that tosatisfy themeaningof ‘ aseriesof relatedmattersor transactions ’, the transactions alleged must be ‘ dependent ’ on each other. In applying that definition to the present case, the Court held it was common ground that the individual transactions were not conditional or dependent on each other. At first instance, Teare J found a real and substantial degree of similarity in the failures, which was neither fanciful nor insubstantial, and that there were ‘similar acts or omissions ’.

575 [2015] EWHC 2398. 576 AIG Europe Ltd v OC320301 LLP [2016] EWCA Civ 367. 577 AIG Europe Ltd v Woodman & Ors [2017] UKSC 18. 578 Ibid [22].

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