Law firm Russell-Cooke acted for the Solicitors Regulation Authority (SRA) as intervener in the Court of Appeal in Baines & others v. Dixon Coles & Gill [2021] EWCA Civ 1211. The case examined the ability of insurers to aggregate claims against solicitors arising from misappropriations of client money.

Linda Box, former Senior Partner of law firm Dixon, Coles & Gill, stole at least £4 million from clients over more than a decade. When the thefts were discovered in 2016, the firm closed and was subsequently intervened into by the SRA. Mrs Box was struck off in November 2016. She was convicted in March 2017 of 13 counts of theft, fraud by abuse of position and forgery and sentenced to 7 years' imprisonment.

The firm's insurers paid claims up to the £2 million limit of indemnity for any one claim under the firm's insurance policy. The Claimants' claims were not paid on the basis that the limit of indemnity for a single claim had already been reached, and the insurers were entitled to aggregate the Claimants' claims with other claims arising from Mrs Box's dishonest course of conduct. The insurer argued that Mrs Box's thefts form a series of related acts and that the SRA's minimum terms and conditions for solicitors' professional indemnity insurance permit all of the claims arising from that series of thefts to be aggregated.

The Claimants obtained a declaration by the High Court that the insurers were not permitted to aggregate the claims, and the insurers appealed. The SRA's application to intervene was accepted given its public interest role as regulator responsible for setting the minimum terms and conditions and administering the SRA Compensation Fund.

The Court of Appeal rejected the insurer's argument that clause 2.5(a)(ii) of the SRA minimum terms, which permits the aggregation of claims arising from "one series of related acts or omissions", should be construed to permit the aggregation of claims arising from thefts which are related because they all formed part of an extended course of dishonest conduct on multiple occasions over many years.

Lord Justice Nugee, giving the judgment of the Court, held that Lord Hoffman's reasoning in Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48 applied to clause 2.5(a)(ii) of the SRA minimum terms and could not be distinguished: for aggregation under clause 2.5(a)(ii) it is not enough that claims A, B and C result from acts A, B and C respectively and that the acts are related; what needs to be shown is that claims A, B and C each result from the series of acts A, B and C. Claims arising from separate thefts by Mrs Box do not aggregate simply because they form part of a dishonest course of conduct, because it cannot be said that each of the claims arises from a series of Mrs Box's thefts.

The Court briefly addressed the policy considerations underlying the SRA minimum terms and emphasised that the primary purpose of the SRA's power to set minimum terms for solicitors' professional indemnity insurance is the protection of the public.

The Court of Appeal also rejected an alternative submission by the insurer that aggregation was permitted on the basis that there was one deemed claim by the innocent partners to make good the deficiency in the firm's client account.

Russell-Cooke's team consisted of partners John Gould and Michael Stacey, associate Lauren Cormack. The team instructed Dominic Kendrick QC of 7 King's Bench Walk.