In Spire Healthcare Ltd v Royal and Sun Alliance Insurance PLC  EWCA Civ 317, the Court of Appeal considered the wording of the schedule and a proviso in a liability policy. The schedule set limits of £10 million for any one claim and £20 million for all claims during the period of cover. The proviso provided that the total amount payable arising out of all claims consequent on or attributable to one source or original cause ‘shall not exceed the limit in the schedule’ without specifying whether that limit was £10 million or £20 million.
The claim arose out of unnecessary and negligent operations performed by a surgeon for which Spire Healthcare Ltd (“Spire”) agreed to pay compensation to the patients. His Honour Judge Waksman QC ruled that the insurer’s liability to indemnify Spire was limited to £10 million as the claims were consequent on or attributable to one source or original cause. Spire appealed.
Spire’s arguments were that the proviso was inconsistent with the schedule and that a reasonable reader would have focused on the schedule. The schedule contained no reference to the proviso and as the proviso did not expressly say that linked claims were to be treated as a single claim it was wrong to assume that they would be treated as such. The wording of the schedule and proviso was ambiguous and applying the contra proferentem rule the construction more favourable to the insured should apply.
In dismissing the appeal, Lord Justice Simon’s starting point was to consider the combined effect of the schedule and proviso without giving greater or lesser weight to either. The approach to the interpretation of the policy of was that of sophisticated insured who is assisted by professional advice and who does not restrict their reading to the limits of indemnity in the schedule. The judge acknowledged that the wording of the proviso could have been clearer (HHJ Waksman QC had said ‘in frequently used, modified and revised policies of insurance, neatness and elegance are often lost’) but also that in some circumstances, for example where there is a deductible or excess, the aggregation of claims might work to the insured’s advantage. There was no real ambiguity in the schedule and proviso when read together and so the contra proferentem rule did not apply.
Two observations on the case. First, Lord Justice Simon recognised that the insured in a liability policy of this type was a sophisticated reader who read all the policy and was professionally advised. Second, a lot of time and expense might have been saved if neatness, elegance and a greater degree of precision had been retained in the modification and revision of the policy.