UK: Aggregation Words

Last Updated: 17 June 2016
Article by Clyde & Co LLP

Most Read Contributor in UK, September 2017



Coxe v Employers' Liability Assurance Company Ltd [1916] 2 KB 629

The words 'caused by' and 'arising from' had always been construed as relating to the proximate cause.

Policy excluded cover for death "directly or indirectly caused by, arising from, or traceable to ... war." This meant the proximate cause.

Scott v Copenhagen Reinsurance Company (UK) Ltd [2003] EWCA Civ 688

"Arising from", when coupled with "one event", should be regarded as a relatively strong and significant link".

"Arising from" signifies more than simply a "weak causal connection" – a significant causal link is needed.

The capture of the airport was too remote an event to aggregate. War, or the outbreak of war, was the relevant event and was the cause of the aircraft's destruction and hence the loss.

The unities of cause, place, time and intention were an appropriate test even where one event leads to losses at different times.

The main test is one of intuition and common sense in light of the purpose of the clause ie aggregation of one loss with another.

The Evaggelos TH [1971] 2 Lloyd's Rep 2000

"Donaldson J held that a provision in the charter whereby the charterers indemnified the owners 'from all consequences or liabilities that may arise from the Captain . . . complying with their orders' required the owners to prove that the proximate cause of the loss of their vessel was compliance with such orders. . . ." (Beazley Underwriting Ltd v The Travelers Companies Inc [2011] EWHC 1520 (Comm)).

In the context of a charterparty giving an indemnity, proximate cause had to be shown.

Orient-Express Hotels Ltd v Assicurazioni General SA (UK Branch) (t/a Generali Global Risk) [2010] EWHC 1186 (Comm)

A New Orleans hotel was insured against business interruption losses "directly arising from Damage". The hotel and the surrounding area were damaged by Hurricanes Katrina and Rita. However, a curfew was also imposed meaning that even if the hotel had been undamaged, it could not have received visitors.

Hamblen J held that the policy required the ordinary "but for" test for causation to apply. Accordingly, the insured could only recover if it could show that the loss would not have arisen had the damage to the hotel not occurred, and it could do that on the facts.

ARC Capital Partners Ltd v Brit UW Ltd & Anor [2016] EWHC 141 (Comm)

The phrases "arising from" and "in any way involving" must have different meanings, otherwise the latter phrase would be left "without any real content" (or else the former phrase would serve no purpose if the latter phrase did not require any causal element at all).

Referring to earlier authority, the judge confirmed that "arising from" meant "proximately caused by" or "directly caused by" and went on to find that "in any way involving" therefore meant "indirectly caused by" in this context. In that way, "the two phrases are given recognisably distinct meaning and the clause hangs together as a whole". The clause therefore required some act, error or omission which is "genuinely part of a chain of causation which leads to liability for the claim in question".


Caudle v Sharp [1995] LRLR 433

The claim was for the negligent writing of 32 separate contracts of insurance by a Lloyd's underwriter. The policy wording referred to each and every loss to be aggregated if arising out of one event.

The court found that the words "arising out of" should not be construed in the limited sense of referring to the direct and proximate cause. Some wider test of causation was implied although there must be some restriction with respect to remoteness.

Beazley Underwriting Ltd v The Travelers Companies Inc [2011] EWHC 1520 (Comm)

In the context of an indemnity deed (not an insurance policy), "arising out of" required "a degree of causal connection" but not proximate cause.

"I am prepared to accept that 'arising out of' ... does not dictate a proximate cause test, and that a somewhat weaker causal connection is allowed. That is to some extent supported by the fact that the loss or liability may arise from a combination of related events, occurrences or matters. Thus the clause may provide indemnity in respect of indirect loss."

British Waterways v Royal & Sun Alliance Insurance Plc [2012] EWHC 460 (Comm)

A father and son were killed while operating a tractor as a contractor of the claimant. The policy excluded liability for "liability arising out of the operation as a tool of the [tractor]". In issue was whether at the time of the accident a hedge-cutter attached to the tractor had been is use, in which case the tractor was being operated as a tool. Also in issue, was whether an accident that occurred while driving the tractor away from a hedge (having trimmed that hedge) gave rise to liability that arose out of the use of the tractor as a tool.

Burton J reviewed a number of conflicting decisions on the meaning of "arising out of" at para 43.

He emphasised that the words will have a different meaning depending on the context in which they are used.

And found that a stricter, proximate cause, test applies in the context of an exclusion.

Burton J found that the hedge cutter was not in use at the relevant time and that the proximate cause of the accident was not the tractor's use as a tool.

Khanty-Mansiysk Recoveries Ltd v Forsters Llp [2016] EWHC 522 (Comm)

This was not an insurance case, but the judge's comments on one issue are of possible interest to insurers. Eder J was required to interpret the following phrase in a settlement agreement which defined "claims": "arising out of or in connection with the Action or the invoice...referred to in the Action".

The judge accepted that the claim which the claimant was bringing did not "arise out of" the Action or the invoice. However, the defendant sought to argue that "in connection with" had a wider meaning, which included matters which were indirectly connected (relying on the earlier decision of Barclays Bank plc v HMRC [2007], in which the Court of Appeal concluded that a connection may be indirect for the purpose of the definition in that case).

Eder J cautioned reference to earlier authorities as to the meaning of a particular word or phrase "is often unhelpful and sometimes dangerous", given the different context in which the word or phrase may have been used. However, he added that: "Here, it is sufficient to say that, as a matter of language, the words "in connection with" are plainly of wider scope than the words "arising out of". On the facts, he accepted that the proceedings being brought were "connected with" the Action and invoice, and therefore caught by the settlement agreement.

COMMENT: These two phrases commonly appear in aggregation clauses in (re)insurance policies and so Eder J's general comment that linguistically "in connection with" is wider than "arising out of" is of interest. The use of the word "or" in the phrase is also of probably relevance. It will be recalled that in the recent case of ARC Capital v Brit Syndicates (see above under "arising from"), where the phrase in question was "arising from or in any way involving", Cooke J confirmed that "arising from" meant "proximately caused by" or "directly caused by" and went on to find that "in any way involving" therefore meant "indirectly caused by" in this context. In that way, "the two phrases are given recognisably distinct meaning and the clause hangs together as a whole".

Hockin & Ors v The Royal Bank of Scotland & Anor [2016] EWHC 925 (Ch)

"He referred me to the consideration of similar provisions including "arising out of or in connection with" in KMR Ltd v Forsters LLP [2016] EWHC 583 (Comm) per Sir Bernard Eder at [38] – [40]. In particular, at [40] the judge commented that it is often unhelpful and dangerous to rely upon earlier authorities as to the meaning of a particular word, with which I agree. He went on to state, however, that as a matter of language, "in connection with" was clearly wider than "arising out of", a conclusion with which I also agree."

Dunthorne v Bentley [1996] RTR 428; [1996] PIQR P323; Times, March 11, 1996

The policy covered bodily injury "arising out of" use of a motor vehicle - this meant the test was wider and included less immediate consequences "it still excludes the use of the vehicle being causally concomitant but not causally connected with the act in question" (so, where a woman ran across the road and was killed following her car running out of petrol, that was an event "arising out of" her use of the car).

King v Brandywine Reinsurance Company [2005] EWCA Civ 235

Not much discussion but a sufficient causal link was found where there was both negligent navigation and pollution "arising out of" the consignment of oil.

To read this Report in full, please click here.

Aggregation Words

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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