Ahmed v White & Co [2025] EWHC 2399 (Comm)
Accounting practice White & Co, and its associated firm MKP, provided clients with financial and tax advice about investment in EIS and related schemes. The investments made losses. When White & Co and MKP went insolvent, individual investors claimed against their professional indemnity insurer, Allianz, under the Third Party (Rights against Insurers) Act 2010.
There were two key issues before the High Court:
The notification clause in the Allianz policy said:
“The Policyholder shall as soon as reasonably practicable during the Policy Period notify the Insurer… of any circumstances of which any Insured becomes aware during the Policy Period which is reasonably expected to give rise to a Claim”.
There were three relevant notifications to Allianz:
The claimants argued that a reasonable person, with the background knowledge reasonably available to Allianz, would have understood these notifications collectively as a ‘hornets’ nest’ notification that White & Co would face other allegations of negligent tax and investment advice already made, meaning that no further notifications of subsequent similar claims were required.
Allianz countered that (a) the Akbar Letters notified the Akbar Letters claims by the eight investors, but not other claims by other investors and (b) neither the Block Notification nor the Kennedys Documents amounted to a notification of circumstances or claims within the meaning of the policy.
Akbar Letters
The court found nothing from the words used in the Akbar Letters would make the reader think other claims from claimants might arise. On its face the notification simply says the eight claimants in question intended to claim against White & Co for negligent advice.
The Block Notification
The court found that the Block Notification was a valid notification of circumstances under the policy. The policy required White & Co to notify Allianz “as soon as reasonably practicable during the Policy Period… of any circumstance… which is reasonably expected to give rise to a Claim”. The notification was, however, confined to allegations against MKP. It did not put Allianz on notice of claims against White & Co. Whilst a reasonable person in White & Co’s position would have understood that it might face future claims, White & Co did not communicate this to Allianz.
The Kennedys Documents
These documents did not comprise a valid notification to Allianz. Kennedys was not White & Co’s agent for the purposes of notifying circumstances to Allianz and, indeed, if it had been, then that would have created a conflict of interest under the joint retainer.
Conclusion
The court found there was no ‘hornet’s nest’ notification.
The Policy defined “Related Claims” as:
“any Claims alleging, arising out of, based upon or attributable to the same facts or alleged facts, or circumstances or the same Wrongful Act, or a continuous repeated or related Wrongful Act”.
The claimants argued that this did not apply to the various investment claims: (1) the claims did not arise from the “same” facts or alleged facts because White & Co advised each claimant separately; (2) each claimant suffered their own loss; and (3) each instance of negligent advice was a separate breach of duty to a separate claimant.
In contrast, Allianz argued these were all “Related Claims” because White & Co’s alleged “Wrongful Act” was the same for each claimant.
On the first of the claimants’ arguments, the court held that there is nothing in the language of the Related Claims provision which prevents a claim whether actually notified or one that arises from a communication, that falls within the deeming provision of the policy relating to the notification of circumstances from also falling within the category of “Related Claims”.
The court held that the adjective “same” (which qualified “facts”, “alleged facts” or “circumstances) significantly modified the Related Claims clause. Mere similarity was not enough: it had to be the “same”. In this case, however:
The court therefore held that each act of negligence was a separate breach of duty to a separate claimant. Those negligent acts did not collectively constitute the “same” Wrongful Act.
However, the Related Claims clause went on to refer to a “related Wrongful Act”. The court found this was effective to aggregate the claims as “Related Claims”: White & Co’s allegedly negligent investment advice for the EIS, Seed EIS and Super EIS investments was all based on its understanding of section 165 of the Income Tax Act 2007.
This case is a reminder that the precise wording of a notification matters, especially for those wanting to make a ‘block’ or ‘hornet’s nest’ notification. It is also helpful confirmation that jointly instructed solicitors do not typically act as the policyholder’s agent for the purpose of notifying insurers.
Furthermore, as usual, aggregation comes down to a forensic examination of the wording and the facts: here the single word “related” proved to be determinative against the factual matrix.
If you have any questions on this topic or would like advice on a similar claim, get in touch.
Neema Daniel - Assistant Solicitor
Andrew Schütte - Partner & Head of Reinsurance
The service you deliver is integral to the success of your business. With the right technology, we can help you to heighten your customer experience, improve underwriting performance, and streamline processes.
