Simmonds v Gammell

Under an aggregation clause covering losses arising from one event, the relevant event must be something happening at a particular time, place and in a particular way. It cannot be merely a continuing state of affairs or a series of negligent acts. Once a single event is identified, aggregation requires a significant, though looser than proximate, causal link and absence of remoteness. Whether that link and the necessary unity exist is a fact-sensitive exercise of judgment. On an appeal from arbitration, the court should not interfere with an evaluative conclusion within the range reasonably open to the arbitrators where the correct legal test was applied.

The Reinsurers appealed against an arbitration award dated 21 December 2015. The majority arbitrators held that workers’ compensation claims and respiratory injury claims arising from the World Trade Centre attacks could be aggregated under clause 3.1 of the Joint Excess Loss Committee wording, which covered losses arising from one event. A third arbitrator dissented.

The Reinsurers argued that the claims arose from a continuing state of affairs or numerous negligent omissions during the rescue and clean-up operations, and that the attacks were too remote. The central issues were whether the attacks could constitute the relevant event and whether the arbitrators had applied the correct legal test.

1. Appeal dismissed. The arbitrators had applied the correct legal test under the aggregation clause. Costs followed the event.
2. Meaning of one event. An event is something which happens at a particular time, place and in a particular way. It is not a state of affairs or a series of different negligent acts. The relevant event here was the attack on the World Trade Centre and the destruction of the Twin Towers.
3. Aggregation test. The court reviewed Caudle v Sharp [1995] LRLR 433, the unities guidance in KAC v KIC [1996] 1 Lloyd's Rep 664, and the comprehensive analysis in Scott v Copenhagen Reinsurance Co UK Ltd [2003] Lloyd's Rep 696. The enquiry requires an identifiable event preceding the losses, a causative link looser than proximate cause but significant rather than weak, absence of remoteness, and a sufficient degree of unity to justify aggregation.
4. Application. The attacks had a clear and obvious, significant causal connection with the respiratory claims. The toxic dust and debris resulted from the attacks, and the rescue and clean-up operation followed from them. The alleged negligence of the insured could also have been causative of liability without preventing the attacks from being a significant cause for aggregation. The unities were an aid to the enquiry, not an additional or rigid legal test.
5. Arbitration appeal. Applying The Chrysalis [1983] 1 Lloyd's Rep 503 and The Baleares [1993] 1 Lloyd's Rep 215, the court held that intervention would require application of the wrong legal test or a conclusion which no reasonable arbitrator properly applying the correct test could reach. The arbitrators’ assessment of causal strength was an exercise of judgment on fact or mixed law and fact, and was neither perverse nor legally erroneous.

• Arbitration — An award dated 21 December 2015 was made by two arbitrators, with a dissenting opinion from a third arbitrator. The majority allowed aggregation of the claims under the reinsurance contract.
• High Court (Commercial Court) — Permission to appeal was granted by Walker J on 17 March 2016. The appeal was dismissed and costs followed the event.