WRBC Corporate Member Limited v AXA XL Syndicate Limited & Ors

In an excess of loss reinsurance treaty, the phrase “each and every loss or series of losses arising out of one event” ordinarily refers to a causative event leading to the losses. A separate definition of “Any One Event” does not govern that phrase where the wording, structure and commercial context point to a different construction. Redundancy is only one factor in the unitary exercise of interpretation. A corrective construction requires a clear linguistic mistake and a clear correction; it is unnecessary where ordinary construction resolves an ambiguity. For aggregation, a significant causal connection is required, but the event need not be the sole or proximate cause. Whether several measures form one event depends on their character, sequence and context. Continuing or relaxing restrictions will not ordinarily constitute separate aggregating events.

WRBC, a Lloyd’s underwriting member, claimed indemnities from reinsurers under two materially similar multi-line excess of loss treaties covering losses in its contingency business. The underlying losses arose from the cancellation or postponement of conferences and similar events following Covid-related measures in six US states and England.

The first issue was whether “event” in the limits clause meant a causative event, such as a governmental restriction, or the defined “Any One Event”, meaning an individual conference, exhibition or convention. If WRBC succeeded, the court had to determine which of 174 losses arose from the same event for aggregation and deductible purposes.

1. Construction Issue. The claim succeeded on construction. The phrase “arising out of one event” was construed in its ordinary causal sense. The absence of the capitalised expression “Any One Event” in the limits clause, and the absence of an express cross-reference to the definitions section for “event”, supported that conclusion. The causal construction also avoided an anomalous result in which contingency business alone lacked meaningful access to the higher reinsurance layers.
2. The definition of “Any One Event” could not be imported merely because the word “event” appeared elsewhere in the treaty. The redundancy of that definition was not conclusive. The treaty contained features consistent with copied or inherited wording, and the countervailing textual and commercial considerations outweighed the surplusage argument.
3. The contextual material, including the 2019 placing submission, earlier treaties and submissions, and related correspondence, confirmed that the higher layers were intended to respond to catastrophe losses aggregated by reference to a causative event across the classes of business. The earlier material was relevant factual matrix where reasonably available to the contracting participants.
4. A corrective construction was unnecessary and inappropriate. The position was, at most, ambiguous, rather than a clear linguistic mistake requiring an equally clear correction under Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38.
5. For the Aggregation Issue, a significant causal connection was required between the event and each cancellation. The event need not be the sole or proximate cause. The inquiry was fact-sensitive and involved an exercise of judgment having regard to the wording and purpose of the aggregation clause.
6. Several governmental measures could in principle constitute one event, but the measures in California and England were distinct events because they differed in character and effect. A later measure could not cause an earlier cancellation merely because it was foreseeable or imminent. A declaration of emergency, without more, was insufficient where no operative restriction had preceded the cancellation. Where an event was postponed and later cancelled, the cancellation was the relevant loss for causation purposes.
7. The vast majority of the 174 claims were allowed, with most capable of aggregation with other claims in the same jurisdiction. The parties were to calculate the consequential financial figures.