Standard Life Assurance Ltd v Ace European Group & Ors

Standard Life Assurance Ltd v Ace European Group & Ors

Remediation payments, including the cash injection, were reasonably and necessarily incurred by SLAL in taking action to avoid or reduce third party claims of a type covered under the policy, thus qualifying as 'Mitigation Costs'. The payments are not excluded by Clause 18(iii), as the liability did not arise out of fair valuation but from mis-selling based on misleading marketing literature. All claims are aggregated for the purposes of the deductible.

Parties
Claimant: Standard Life Assurance Limited; Defendant: ACE European Group; Defendant: Liberty Mutual Insurance Europe Limited trading as Liberty International Underwriters; Defendant: Catlin Insurance Company (UK) Limited; Defendant: Chartis Insurance UK Limited (formerly AIG UK Limited); Defendant: Timothy Joseph Carroll (on behalf of syndicate 4444 for 2008 year of account); Defendant: John David Neal (on behalf of syndicate 1886 for 2008 year of account); Defendant: Aspen Insurance UK Limited; Defendant: Axis Speciality Europe Limited trading as Axis Specialty London; Defendant: Houston Casualty Company Europe Seguros y Reaseguros, S. A.; Defendant: Philip Thomas Foley (on behalf of syndicate 1218 for 2008 year of account); Defendant: Arch Insurance Company (Europe) Limited
Jurisdiction
England and Wales
Judgment Date
01 February 2012
Procedural Posture
Insurance Claim / Final Judgment
Outcome
Claim allowed
Legal Topics
Professional Indemnity, Mitigation Costs, Policy Interpretation, Aggregation, Exclusion Clauses, Regulatory Compliance
Insurance Law Contract Law Financial Regulation Professional Indemnity Mitigation Costs Policy Interpretation Aggregation Exclusion Clauses +1 more

Case Brief

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Parties

Standard Life Assurance Limited

Claimant

ACE European Group

Defendant

Liberty Mutual Insurance Europe Limited trading as Liberty International Underwriters

Defendant

Catlin Insurance Company (UK) Limited

Defendant

Chartis Insurance UK Limited (formerly AIG UK Limited)

Defendant

Timothy Joseph Carroll (on behalf of syndicate 4444 for 2008 year of account)

Defendant

John David Neal (on behalf of syndicate 1886 for 2008 year of account)

Defendant

Aspen Insurance UK Limited

Defendant

Axis Speciality Europe Limited trading as Axis Specialty London

Defendant

Houston Casualty Company Europe Seguros y Reaseguros, S. A.

Defendant

Philip Thomas Foley (on behalf of syndicate 1218 for 2008 year of account)

Defendant

Arch Insurance Company (Europe) Limited

Defendant

Procedural Posture

Insurance Claim / Final Judgment

Legal Issues

  1. 1 Whether remediation payments including cash injection are recoverable as 'Mitigation Costs' under the professional indemnity policy
  2. 2 Proper construction of 'Mitigation Costs' definition
  3. 3 Applicability of Exclusion 18(iii) (fair valuation exclusion)

Ratio Decidendi

Remediation payments, including the cash injection, were reasonably and necessarily incurred by SLAL in taking action to avoid or reduce third party claims of a type covered under the policy, thus qualifying as 'Mitigation Costs'. The payments are not excluded by Clause 18(iii), as the liability did not arise out of fair valuation but from mis-selling based on misleading marketing literature. All claims are aggregated for the purposes of the deductible.

Court Disposition

Claim allowed

Orders

  • SLAL is entitled to recover all remediation payments including the cash injection, subject to a single deductible of £10 million.
  • Appropriate declaration to be agreed by counsel.