Aggregation decisions – a bit like buses…

Hot on the heels of the High Court’s decision last month that numerous defalcations by a dishonest solicitor could not be aggregated (see my post on that at https://lnkd.in/dkN2UY2) comes a further High Court judgment on 10 December 2020, again ruling against aggregation, in Spire Healthcare Ltd v RSA

The dispute arose out of the activities of the rogue surgeon, Ian Paterson, who was ultimately jailed for 15 years (increased to 20 years on appeal) for carrying out unnecessary mastectomies. As well as being a Consultant Breast Surgeon in the NHS, he also maintained a lucrative private practice, working at two Spire hospitals, and it was there that he performed numerous mastectomies on patients whom he had falsely told had breast cancer.

In fact, there were two strands to Mr Paterson’s wrongdoing:

First, he had, as described, carried out unnecessary surgery on healthy patients (“over-treating”). It is almost certain that his motive here was financial.

Secondly, he had – in both his NHS practice and his private work – performed partial rather than full mastectomies (“under-treating”) on patients who did have breast cancer, thereby exposing them without their consent to the risk of the cancer returning, having adopted this forbidden procedure either to save time or because the result was considered aesthetically preferable.

About 750 of Mr Paterson’s victims sued Spire, either for “over-treating” or “under-treating” (and, in a few cases, for both). The claims cost Spire a total of £37m in damages, claimants’ costs and defence costs.

Spire was insured for those claims under a policy written by RSA, with a limit of £10m for all claims “…consequent on or attributable to one source or original cause…”.

RSA argued that all the claims were “caused” by Mr Paterson and/or to his propensity to negligence or dishonesty. That argument failed, the court (HH Judge Pelling QC, sitting as a Judge of the High Court) instead agreeing with Spire that the cause of the over-treating claims was entirely distinct from the cause of the under-treating claims. In paragraphs 24 & 25 of the judgment, Judge Pelling QC spelt this out:

“If the result was not as I have summarised it, then there would be no effective causative link between what is contended to be the originating cause and the loss in each case that it was sought to aggregate nor would what is alleged to be the originating cause explain adequately or at all why the negligent act or omission leading to the claims had occurred. A hypothetical example may help to explain the point. An orthopaedic surgeon performs both knee replacement and hip replacement procedures. He operates under a mis-appreciation as to the manner in which hip replacements are to be carried out which constitutes negligence applying established principles resulting in multiple claims by patients on whom he performed hip replacement surgery. At the same time in relation to his knee replacement practice he operates under another and different mis-appreciation relevant exclusively to knee replacement surgery which constitutes negligence applying established principles resulting in multiple claims by patients on whom he performed knee replacement surgery. In my judgment each mis-appreciation would constitute a separate originating cause unless for example it could be said that the existence of the mis-appreciations was for example the result of the Insured’s failure properly to train the individual concerned.

Characterising the originating or original cause as “… negligent and inappropriate clinical care …” or, alternatively, as deliberate misconduct does not assist because in the hypothetical example set out above, the cause of the negligent hip replacement surgery whilst causative of all the hip claims was not in any sense causative of the knee claims and vice versa. Submitting as [RSA] does that in this case it is a statement of the obvious that all the claims were the result of Mr Paterson and his conduct ignores the need to search for an effective original cause of all the losses it is sought to aggregate…”

The result, in financial terms, was that Spire was entitled to £20m, and not just £10m, from RSA.

It is far too soon to know whether RSA will try to appeal. But my own view (famous last words…) was that this decision – like its predecessor last month – was entirely correct.

The full judgment is here: https://www.bailii.org/ew/cases/EWHC/Comm/2020/3299.html

Jonathan Corman is a partner at Fenchurch Law.