Where a policy aggregated claims for ‘similar acts or omissions in a series of related matters or transactions’ the enquiry was whether there was a real connection between the transactions in which they occurred.

The use of the word ‘related’ implies there must be some interconnection between the matters or transactions so that they in some way fit together. This is a factual issue.

The UK Supreme Court in AIG Europe Limited v Woodman dealt with a situation where the transactions in question involved an investment in two development schemes in Turkey under a contractual arrangement subject to a trust deed and an escrow agreement.

The solicitors who held investors’ money in escrow were not entitled to release the money to the developer until the value of the assets held by the trust was sufficient to cover the investments.

The solicitors failed to properly apply the test before releasing the funds to the developers with the result that the funds were released without adequate security and were lost by the investors when the development failed.

The transactions by the investors in each development were connected in significant ways. They were investing in a common development, for which the money advanced by them was intended, in combination, to provide the developers with the necessary capital. And they were co-beneficiaries under a common trust. On these facts the claims of each group of investors arose from acts or omissions in a series of related transactions. The transactions fitted together in that they shared the common underlying objective of the execution of a particular development project. They also fitted together legally through the trusts under which the investors were co-beneficiaries. There was a real connection between the transactions, not merely a similarity of the type of act or omission that caused the loss.

The court pointed out (as courts do) that it depends on the specific wording. Individual words or phrases may not carry the same meaning in different clauses of different policies. For instance the word ‘related’ in the phrase ‘a series of related matters or transactions’ does not bear the same connotation in the phrase ‘related series of acts or omissions’.