Notification And Aggregation In Professional Indemnity Policies: Insights From Ahmed V White & Co

In Ahmed v White & Co [2025] EWHC 2399 (Comm), the Court considered two issues in relation to a professional indemnity policy:

• Notification – in particular, whether a notification of certain initial claims, including a block notification, and the provision of information to insurers by jointly retained defence solicitors, amounted to a "Hornet's Nest" notification which had also validly notified the insurer of "circumstances" from which later, contested claims arose; and
• Aggregation – whether multiple claims were deemed to be a single claim when the wording provided for the aggregation of claims "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."

BACKGROUND

The claimants were individual investors who relied on advice from their accountants, White & Co, and its associated firm, MKP, to invest in various supposedly tax-efficient schemes. These included Enterprise Investment Schemes (EIS), Seed EIS, Super EIS, Film Rights Business (FRB) ventures, and corporate bonds.

The investments were unsuccessful, leaving the claimants with significant losses. The claimants alleged that the advice they received was negligent and given in breach of fiduciary duty.

Allianz was the professional indemnity insurer of White & Co and MKP when the claims were first made. Following White & Co's insolvency, the claimants sued Allianz directly under the Third Parties (Rights against Insurers) Act 2010, seeking, in the ordinary way, to prove both White & Co's liability to the claimants, and Allianz's consequential liability under the policies to White & Co. This judgment considered only insurance coverage, in the event that White & Co should be found liable.

The case focused on a range of issues, of which two are of particular interest:

• When notifying certain initial claims, had White & Co validly also notified Allianz of circumstances from which the later, contested claims arose?
• If they were covered, were the multiple claims deemed to be one claim under the policy's aggregation clause?

DECISION

Notification of circumstances

In the usual way, the policy contained a clause dealing with the notification of circumstances. This stated that:

Any claim arising from those circumstances – even if arising after expiry of the policy period – would then be deemed made when the circumstances were first notified.

The policy required any notification to include specific details, such as the nature and dates of the potential wrongful acts, the identities of possible claimants, and an account of how the insured first became aware of the circumstances.

The claimants said that White & Co had made three relevant notifications to Allianz:

• The first, known as the "Akbar Notification," consisted of an email from the broker to Allianz attaching letters from a direct access barrister instructed by eight individuals which made allegations in relation to their individual investments. Coverage in relation to these individual investments was not at issue in these proceedings.
• Second, and subsequently, the broker made the "Block Notification" on behalf of White & Co and MKP. This consisted of a set of correspondence sent by White & Co and MKP's solicitors, JMW, to their broker in relation to enquiries which had been opened by HMRC into the EIS schemes. This correspondence advised that the "cases under investigation are those where [MKP] advised. Cases involving advice provided by [White & Co] may be investigated in due course." The broker forwarded this material to Allianz.
• Finally, the "Kennedys Documents": Kennedys had been instructed on a joint retainer by White & Co and Allianz to defend the claims referred to in the Akbar Notification, and claims made by three claimants with similar claims. The Kennedys Documents consisted of correspondence sent by the claimants' direct access barrister to Kennedys, solicitors acting for White & Co and Allianz under a joint retainer to defend White & Co. This material was forwarded by Kennedys to Allianz.

The claimants contended that, considered altogether, these communications amounted to a sweeping "Hornet's Nest" notification, i.e. a notification putting insurers on notice of a general issue with advice provided by White & Co in relation to various investment schemes, even if the exact scope and consequences were not then clear.

The Court revisited established principles on notification, drawing on authorities such as Euro Pools plc v RSA [2019] EWCA Civ 808 and HLB Kidsons v Lloyd's Underwriters [2007] EWHC 1951 (Comm). The Court acknowledged that a Hornet's Nest notification of circumstances can, in principle, be made, and that the insured is not required to identify every potential claimant, or to provide a fully detailed account of a claim. It is enough that the insured is aware of and notifies facts or circumstances from which a reasonable person would anticipate that future claims might arise.

The Court considered, applying Kajima UK Engineering Ltd v The Underwriter Insurance Company Ltd [2008] EWHC 83 (TCC), that a notification of circumstances must be construed objectively, and that, whilst the Court may have regard to what the insured subjectively knew when it made the notification, and the circumstances in which it was made, what matters is the language used within the notification itself, as it would be read by a reasonable insurer.

On the facts, the Court arrived at the following conclusion:

• The "Akbar notification" was not valid as a notification of circumstances because – despite the fact that a reasonable person in the position of White & Co would have concluded when making this notification that further claims might be made by other clients and in relation to other investments – the terms of the notification were limited to specific claims made by specific clients regarding specific investments. The Court said that the letters did not suggest that other clients or investments might be affected, they did not communicate any potentially broader problem to Allianz, and "the contents of the letter should not be interpreted broadly, drawing in facts which the informed reader might know from other sources." Whilst a reader might speculate that there were potential further claims in the pipeline, that possibility was not "internal in the wording" of the notification and such "suspicion would arise from awareness outside of the contents of the letter." The notification was therefore confined to a notification of the specific claims referred to within it: namely, the Akbar claims.
• The "Block Notification" was held to be a notification of circumstances. However, whilst it was held that a reasonable person in the position of White & Co would have understood when making the Block Notification that future claims may be brought against it, the focus of the notification was on claims against MKP, and did not adequately put Allianz on notice of potential claim against White & Co. White & Co had a basis to make a broader notification, but a reasonable insurer in the position of Allianz reading the correspondence would not have understood the firm to be doing so. As such, this was held to amount to a notification of circumstances on behalf of MKP only.
• The "Kennedys Documents" did not amount to valid notification under the policy at all. The Court was not prepared to accept that Kennedys – acting on a joint retainer for White & Co and Allianz to defend the Akbar claims – acted as White & Co's agent for notification purposes in sending the Kennedys Documents to Allianz. The Court noted that this analysis would risk putting Kennedys in a position of conflict between its two clients, and would also be inconsistent with Article 12 of Bowstead & Reynolds on Agency: "Where two or more persons give authority to an agent to do the same thing, it is presumed that the authority is to act for their joint account only...." Therefore, even if the Kennedys Documents would otherwise have been capable of notifying circumstances to Allianz, they were not sent by or on behalf of White & Co in a way which satisfied the requirements of the policy.

The Court therefore rejected the argument that a Hornet's Nest notification had been given to Allianz.

Interestingly, in commenting on the Kennedys Documents, the Court discussed the decision in Barrett Bros (Taxis) v Davis [1966] 1 WLR 1334, which indicates that a breach of a condition precedent to make a compliant policy notification can be cured by the insurer learning of the relevant matters by other means. The Court expressed doubt on this decision in view of more recent authorities (particularly Kidsons – above) and suggested that it should be confined to its facts.

Aggregation

The second issue in the case was aggregation. The question was whether the multiple claims brought by different investors were deemed to be a single claim by the policy's related claims provision, which would cap the insurer's liability at the £2 million aggregate limit.

The related claims clause stated that:

The policy defined "Related Claims" in broad terms 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' position was that the claims did not aggregate for two reasons:

• First, that the related claims clause was not intended to apply to claims made after the policy period but arising from circumstances notified during the policy period; and
• Second, that the claims did not arise from "the same facts or alleged facts..." because each claimant received their own advice from White & Co and so each act of negligence was a separate breach of duty, each claimant entered into their own investments, each had suffered their own loss, and the relevant acts and omissions did not "fit together". (For further commentary on the "fitting together" of transactions for aggregation purposes, see our post on the Supreme Court's 2017 decision in AIG v Woodman [2017] UKSC 17.)

The Court rejected the first of these arguments: "There is nothing that 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."

As to the second argument, the Court held:

• The word "same" in the definition of Related Claims "significantly qualifies" its effect: mere similarity is insufficient and on these facts, the claims related to advice to different investors (or advice given to the same investor in different tax years). Whilst the advice had common themes, it differed in that the advice was given separately to each particular investor and in relation to their particular investments.
• However, the phrase "related Wrongful Act" is not necessarily concerned with identical acts. In considering "relatedness", the Court should have regard to the degree of connection, and here, there was a sufficient degree of connection between the claims relating to EIS, Seed EIS and Super EIS investments so as to aggregate those claims, because the same deficient advice concerning s165 of the Income Tax Act 2007 was given to all of those affected clients.

COMMENT

Whilst this case was unusual in that it involved a third party claim against insurers, the judgment nonetheless provides a useful reminder that where policyholders have a basis upon which to notify circumstances as well as claims, and even to make a Hornet's Nest notification, they should consider doing so and making it clear that they are doing so. Simply forwarding correspondence to insurers may not achieve that effect. Similarly, policyholders should ensure that notifications of circumstances are sent to the correct entity. That will usually involve the policyholder or its broker making a notification to the insurer contact or the insurer's designated representative as stated in the policy schedule, and the notification document spelling out that it notifies circumstances – and not, as in this case, assuming that jointly retained defence solicitors will pass relevant information to insurers in the hope that it will amount to effective notification.

Decisions on aggregation are not commonplace, as many are determined in confidential arbitrations. This judgment gives an interesting application of the leading authorities on aggregation to a set of facts in the financial/ tax advice context.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.