The High Court today rejected an insurer’s attempt to aggregate indemnity claims and save itself £8m in payments to out-of-pocket law firm clients.

AIG Europe had sought a declaration that the limit of indemnity for all claims under its policy with the now defunct International Law Partnership LLP be capped at £3 million.

London firm Royds, representing the professional trustees in two trusts and more than 200 individuals who had invested in holiday property schemes, argued that more than £11m had been lost in total by its clients.

Sitting in the commercial court in AIG Europe v OC320301 LLP & Ors, Mr Justice Teare rejected AIG’s argument that all the claims should be aggregated under the wording of the solicitors’ minimum terms and conditions, which set the minimum standards of cover all insurers should provide.

‘The underlying claims are not to be aggregated as one claim,’ said Teare. ‘They arise out of similar acts or omissions but the acts or omissions are not in a series of related transactions because the terms of the transactions are not conditional or dependent upon each other.

‘The acts or omissions are not therefore in a series of related matters or transactions.’

Richard Woodman, a partner at Royds, said a ruling in the insurer’s favour would have set a ‘very dangerous precedent’ and placed law firms at financial risk if insurance firms had refused to cover multiple claims with high aggregate values.

‘Hundreds of ordinary people had lost money after investing in the schemes overseas and this was a very important case as it would have directly affected our clients’ ability to recover their losses.’

Royds LLP instructed Tom Leech QC of Herbert Smith Freehills (advocacy unit) and Edward Risso-Gill of Thomas More Chambers as counsel for the two-day trial held last month.