Stirring the Hornet’s Nest – When Notification of Circumstances Falls Short

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Lessons from Ahmed and Others v White & Co (UK) Ltd and Another

The UK Commercial Court’s decision in Ahmed and Others v White & Co (UK) Ltd and Another [2025] EWHC 2399 (Comm) provides a timely and helpful restatement of the principles governing notification of claims and circumstances under claims‑made insurance policies, and the limits of so-called “Hornet’s Nest” style notifications. 

Background

The claimants were individual investors who engaged a firm of chartered accountants, White & Co, and an associated firm, McKenzie Knight & Partners (MKP), for investment and tax advice.  In reliance on that advice, the claimants invested in various (supposedly) tax-efficient schemes and corporate bonds which ultimately failed, resulting in substantial losses.  The claimants alleged that White & Co had been negligent and in breach of duty. 

Allianz was the professional indemnity insurer of White & Co and MKP.  After White & Co entered liquidation, the claimants sued Allianz directly under the Third Parties (Rights Against Insurers) Act 2010 seeking to establish both White & Co’s liability and Allianz’s coverage obligations. The trial was confined to coverage issues, leaving liability and quantum to be determined at a later stage.

Notification of circumstances

Although the Allianz policy contained a notification of circumstances provision, the claim turned on a more favourable notification clause under the ICAEW Minimum Terms, that required the insured to notify, in the period of insurance, any circumstance which might give rise to a claim as soon as reasonably practicable, with any resulting claim deemed to have been first made in the period of insurance.

The claimants argued that White & Co had made three relevant notifications to Allianz which taken together amounted to a “Hornet’s Nest” style notification, i.e. one which alerts insurers to a systemic or general issue even if the exact scope and consequences were not clear:

  • The first, known as the “Akbar Letters”, consisted of an email from the broker to Allianz in April 2017 attaching two letters from a barrister instructed by eight individuals alleging losses arising from investments into 14 companies between 2012 and 2014. 

    • The first letter alleged that White & Co had given negligent advice in relation to the specific investments and sought a full account of the investments made into the 14 companies.  It also threatened proceedings for pre-action discovery and a claim for damages.  The broker forwarded the letter to Allianz and stated that “the appropriate course of action would be to note this matter against the current policy and instruct Panel Solicitors to assist the Insured in responding to the Barrister”.  Allianz responded confirming that it had received the notification but needed further information about the detail and number of claims before acceptance could be confirmed.  Allianz also suggested that the claimants’ barrister should be told that the allegations were too vague and that the claimants should provide a compliant letter before claim.

    • The second letter from the barrister stated that he had been instructed to commence proceedings for pre-action disclosure and attached an unsigned witness statement which contained a list of companies in which investments had been made (including nine of the 14 identified companies) together with draft particulars of claim.  Following this second letter Allianz emailed solicitors Mills & Reeve stating that there had been a notification and asking them to investigate this with White & Co.

  • Secondly, a “Block Notification” by the broker on behalf of White & Co and MKP.  This consisted of a set of correspondence sent by White & Co and MKP's solicitors, JMW, to the broker in relation to enquiries opened by HMRC into the investment schemes focusing on premature claims for tax relief.  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."  JMW asked the broker to treat the correspondence as a notification of potential claims in compliance with the terms of the policy.  The broker forwarded this material on to Allianz, with each email being headed “New Notification”.  Allianz responded stating that it was awaiting further information before considering its policy response.

  • Finally, the “Kennedys Documents”, comprised correspondence sent by the claimants’ barrister to Kennedys, who by then were instructed on a joint retainer by White & Co and Allianz to defend the claims referred to in the Akbar Letters and similar claims.  The claimants’ barrister wrote to Kennedys on several occasions between July 2017 and October 2017 seeking information regarding the film rights which had been acquired by specific individuals, seeking further disclosure and making various allegations in a letter before claim, and finally denying that he had defamed White & Co and asserting that no due diligence had been conducted into the investments or companies involved.  This material was forwarded by Kennedys to Allianz. 

The Decision

In a lengthy judgment, His Honour Justice Pearce reviewed the established principles on notification of claims and circumstances under claims made policies.  Drawing on the principles set out in authorities such as HLB Kidsons v Lloyd's Underwriters [2007] EWHC 1951 (Comm), Kajima UK Engineering Ltd v The Underwriter Insurance Company Ltd [2008] EWHC 83 (TCC), and Euro Pools plc v RSA [2019] EWCA Civ 808 the Court reaffirmed that:

  • A “Hornet’s Nest” style notification of circumstances can, in principle, be legitimate where the insured does not know the exact scale and consequences of the problem.

  • The insured need not identify every potential claimant or claim, provided it notifies facts from which a reasonable person would anticipate that future claims may arise.

  • There must be a causal (rather than coincidental) link between the notified circumstances and the later claim.

  • Notifications are construed objectively, by reference to the language used and how it would be understood by a reasonable insurer. 

Applying these principles to the facts, the Court arrived at the following conclusions:

  • The “Akbar Letters” were confined to a notification of the specific claims referred to in the Akbar Letters and did not amount to a “Hornet’s Nest” notification.  While White & Co might have subjectively concluded when making this notification that further claims might arise, the terms of the notification were limited to specific claims made by the specific clients as the letters did not suggest that other clients or investments might be affected or communicate any potentially broader problem to Allianz.  As such, the Court said that “the contents of the letter should not be interpreted broadly, drawing in facts which the informed reader might know from other sources”.

  • The “Block Notification” was held to be a notification of circumstances but was confined to a notification of circumstances on behalf of MKP only.   Its specific focus was on schemes advised upon by MKP and did not put Allianz on sufficient notice of potential claims against White & Co.  This was notwithstanding that the Court held that a reasonable person in the position of White & Co would have understand when making the Block Notification that future claims may be brought against it.  A reasonable insurer in the position of Allianz reading the correspondence would not have understood White & Co to be making a broader notification.

  • The "Kennedys Documents" did not amount to valid notification under the policy.   Kennedys were not acting as White & Co’s agent for notification purposes in sending on the Kennedys Documents and were instructed on a joint retainer with Allianz and White & Co to defend the Akbar claims.  The Court noted that this analysis would risk putting Kennedys in a position of conflict between its two clients.  Therefore, the Court concluded that Kennedys were not notifying claims to Allianz but merely reporting to Allianz and White & Co on matter relevant to investigation and defence of the claims.

The Court therefore rejected the argument that a “Hornet’s Nest” style notification had been given to Allianz.

Comment

The case is somewhat unusual in that it involved a third party claim against insurers.  It does however provide a useful reminder of the importance of making clear and unambiguous notifications of circumstances and ensuring the notification is communicated to the correct entity.

For insurers, the decision provides a clear reaffirmation that the effectiveness and scope of a notification depends on what is objectively communicated, not on what the insured may later say it intended to notify.  While “Hornet’s Nest” notifications remain available in principle, it is important to ensure that notifications clearly articulate the existence of a broader problem, identify the entity at risk, and be communicated by or on behalf of the insured itself.  The decision also reinforces the importance of scrutinising both the language and provenance of notifications when assessing coverage under claims‑made policies.

angus wakeman is a partner at fee langstone