Spire Healthcare Ltd v Royal & Sun Alliance Insurance Plc

An aggregation clause referring to claims attributable to one source or original cause requires a causative link between the proposed unifying cause and every loss to be aggregated. The search is broad and is not confined to proximate cause, but the cause must remain sufficiently specific to explain why the losses occurred. A general description such as an insured person and his conduct is insufficient where different decisions or motivations caused distinct groups of loss. Separate misappreciations or decisions by one individual may constitute separate originating causes. The analysis is fact-sensitive and turns on factual causation, not merely on the legal labels attached to the claims.

Spire sought indemnity from RSA under an insurance policy for liabilities and defence costs arising from claims concerning surgery performed by Mr Ian Paterson. The dispute concerned whether claims arising from negligently performed sub-total mastectomies and claims arising from deliberately unnecessary surgery were attributable to one source or original cause under clause 5(a) of the policy, or to two separate causes.

A further issue was whether the damages, interest and costs attributable to the second group exceeded £10 million. The court therefore had to determine the proper construction and application of the aggregation clause and the evidential sufficiency of Spire’s proof on quantum.

1. Aggregation principles. The court construed the clause without a predisposition towards either insurer or insured. Aggregation clauses must be given a balanced construction according to their language, commercial context and the facts. Standard wording should ordinarily follow earlier judicial construction unless there is a clear contextual distinction or other strong reason.
2. The words “consequent on or attributable to” and “one source or original cause” require a causative link between the proposed originating cause and all losses sought to be aggregated. The search is wider than proximate cause and may trace losses back to a common origin, but the proposed cause must not be stated at so general a level that it ceases to explain the losses.
3. A single individual’s misappreciation, decision or motivation may be an originating cause of multiple claims. Conversely, separate misappreciations or decisions by the same individual may constitute separate originating causes where each caused a different group of negligent acts and losses. The question is fact-sensitive.
4. Applying those principles, the motivation or decision underlying the sub-total mastectomies was different from that underlying the unnecessary operations. The two strands were therefore causally distinct. Describing both as Mr Paterson’s negligence, dishonesty or conduct did not establish the required common effective cause. Legal classification and the fact that one patient could have claims in both groups were immaterial.
5. The Group 1 and Group 2 claims could not properly be aggregated. Spire’s claim therefore succeeded on the aggregation issue.
6. On quantum, the court accepted the evidence of Spire’s solicitors’ audits. RSA had not materially challenged the methodology or sought further information before trial. The evidence established that the Group 2 claims exceeded £10 million. The claim succeeded, with the terms of the order to be addressed at hand-down.

First-instance decision in the High Court (Commercial Court). The judgment does not state any appeal from this decision.