Supreme Court rules in landmark insurance case

AIG Europe Ltd v OC320301 LLP (UKSC 2016/0100)

Wednesday, 22 March, Supreme Court of Justice

The Supreme Court has today (22 March 2017)  expressed  its view that 214 property investors who brought a claim against The International Law Partnership were right to resist insurers AIG Europe Ltd’s attempt to aggregate their claims and limit liability to just £3million.

RWK Goodman, acting for the 214 claimants, negotiated a settlement earlier this year, the details of which remain confidential.

Richard Woodman, a partner at RWK Goodman, who has been representing the 214 investors since 2010, said: “The Supreme Court has today determined an important point of principle in relation to the proper interpretation of the aggregation clause in the SRA’s Minimum Terms of Cover.

“While the clarity and ease of application of the Court of Appeal’s judgment was ultimately not upheld, we are nonetheless very content with the outcome of this decision. The Supreme Court has found that to determine whether matters or transactions are related or not is an acutely fact sensitive exercise of judgment. The Supreme Court’s judgment of this case is, on the agreed facts before it, that the insurers had no right to aggregate the claims of the Peninsula Village investors with those of the Marrakech investors. This means that the insurer’s primary case, that all 214 individual claims could be aggregated to one claim with a £3 million limit has failed, and the alternative case of our clients’ has succeeded.”

Richard Woodman continued: “A precedent has therefore been established for cases involving solicitors professional indemnity policies that insurers should not try to aggregate together multiple insurance claims which involve many transactions that relate to two or more discrete developments or projects.”

“This has been an exceptionally hard fought case brought and funded by ordinary individuals against one of the largest insurance companies in the world, involving a complex area of insurance law. The beneficiaries have had to wait too long for this case to be resolved, due in no small part to the intransigence of the insurer, which launched multiple appeals, and which in the end has not succeeded in its primary objective of vastly diminishing our clients’ right to compensation.

The beneficiaries’ claims were settled on a confidential basis earlier this year.

This landmark professional indemnity insurance appeal was brought to the Supreme Court by AIG Europe Ltd against private investors on the 10 October 2016. Judges had to determine whether claims brought by 214 property buyers and investors under the insurance policy held by defunct law firm, The International Law Partnership (TILP), should be treated as one claim, several smaller claims or individual claims.

Today’s judgment may be the most important since the House of Lord’s decision in Lloyds TSB General Insurance Holdings and others v. Lloyds Bank Group Insurance Company Limited [2003] UKHL 48. It will be the first time the Supreme Court has been asked to interpret the wording of the aggregation clause in the Minimum Terms of Cover (MTC) for professional indemnity insurance policies which are mandatory for all regulated law firms according to rules set by the Solicitors Regulation Authority.

You can find background on this case here.