UK Legal - Clearing up the facts.

(From Reinsurance)

Byline: John Butler.

Lord Hoffmann continued his consideration of whether the phrase "any single act or omission (or related series of acts or omissions)" used in TSB v Lloyds Bank, would enable losses relating to mis-selling to be aggregated by observing that, when events were said to be "related" or forming a "series", the nature of the unifying factor or factors which made them, related or a series, must be expressed or implied by the sentence in which the words were used. Although it might sometimes be necessary to imply a unifying factor from the general context provided, of course, the express language did not make such an implication unnecessary or impermissible.

The only unifying factor that the clause itself provided in this instance to identify the acts or omissions referred to in the parenthesis as being "related" and a "series" was that they "result" in a series of third-party claims. In other words, the unifying element was a common causal relationship: but that common causal relationship was, so to speak, downstream of the acts and omissions within the parenthesis. They must have resulted in each of the claims. This obviously meant that it was not enough that one act should have resulted in one claim and another act in another claim. That provided no common causal relationship.

The acts or events could only form a related series if they together resulted in each of the claims. In this way, the parenthesis played a proper subordinate role of covering the case in which liability under each of the aggregated claims could not be attributed to a single act or omission but could be attributed to acts or omissions acting in combination.

The Court of Appeal had sought to find a unifying factor outside the clause, by implying a reference to a common underlying cause upstream of the acts or omissions in the parenthesis, or some similarity between them. The clause itself said nothing about such unifying factors. Indeed the narrow formulation of the primary concept, "single act or omission", suggested that it was anxious to avoid them. Lord Hoffmann thought such an implication by the Court of Appeal of an unstated unifying factor was impermissible. In his opinion it was quite possible that one could have separate losses caused to a number of people by the combination of more than one act or omission, none of which would have been caused by the one without the other.

Lord Hoffmann adapted an example given by Lord Hobhouse in his decision of losses which may have been caused by the distribution of a misleading document in identical terms by someone who was not himself negligent but ought to have been corrected by someone else who was. The two acts or omissions would be a series that together caused each of the losses.