Spire Healthcare Ltd v Royal & Sun Alliance Insurance Plc

An aggregation clause in an insurance policy must be construed by its language, read with the schedule and the policy as a whole. Where the clause groups claims arising from one source or original cause and links them to the limit of indemnity, it may aggregate those claims even though the policy does not expressly define them as one claim. The applicable limit is determined by the contractual structure and wording. The existence of aggregation for limits of cover does not automatically produce aggregation of the insured’s excess or contribution. A separate contribution provision must itself support that result; the court will not rewrite clear wording merely to make the policy operate in the usual or commercially expected way.

Spire Healthcare Limited sought declarations concerning the effect of aggregation provisions in its combined liability policy with Royal & Sun Alliance Insurance Plc. The dispute arose from numerous clinical negligence claims concerning the treatment of patients by Mr Ian Paterson at Spire hospitals.

The policy provided a £10 million limit for any one medical negligence claim and £20 million for all damages, costs and expenses arising from all claims during the period of insurance. It also required a £25,000 insured’s contribution for each claim, subject to an aggregate contribution of £750,000.

The central issues were whether proviso 5(a) of section 4 aggregated linked claims for the purpose of the cover limit, and whether the contribution provision similarly aggregated the insured’s payments.

1. Judgment for RSA. Proviso 5(a) of section 4 operated as an aggregation clause. Claims consequent on or attributable to one source or original cause were subject to the lower £10 million limit for any one claim.
2. The wording of proviso 5(a) was plainly aggregating language. Read with the schedule, it provided a workable contractual consequence for linked claims. The absence of an express definition deeming linked claims to constitute one claim did not prevent the clause from operating.
3. The court rejected the argument that proviso 5(a) was merely duplicative of proviso 5(b) and the other limits. The significance of possible redundancy depended on the contractual context. Here, section 4 contained distinct limits for single claims and all claims, making the lower limit the evident fit for linked claims.
4. The construction was supported by the approach to contractual interpretation in Arnold v Britton [2015] AC 1619. The natural and ordinary meaning of the words, the policy structure, the purpose of the clause and commercial common sense all supported aggregation. No sufficient ambiguity arose to engage the contra proferentem rule.
5. Aggregation did not extend to the insured’s contribution. The contribution schedule used the word claim, which was not defined so as to include a group of linked claims, and contained no equivalent aggregation wording. Requiring one contribution for linked claims would rewrite the policy. RSA therefore succeeded on both issues.
6. The precise form of declaratory order and consequential matters was to be addressed after judgment.

First-instance judgment in the High Court (Commercial Court). No appellate history was stated in the judgment.