Omair Ahmed & Ors v White & Company (UK) Limited & Anor

When King James II first saw Wren’s magnificent new construction of St Paul’s Cathedral, he is said to have described it as “amusing, awful and artificial (Footnote: ¹).” Whether certain tax mitigation investment schemes are awful or amusing is not relevant to this case; whether they are artificial is one of the central issues.

The Claimants (Footnote: ²) each claim damages for losses alleged to arise from advice given by the First Defendant (“White & Co”) which was negligent and/or in breach of the fiduciary duties owed to the Claimants. The Second Defendant (“Allianz”) was the First Defendant’s professional indemnity insurer for the period 26 November 2016 to 27 December 2017 (“the Allianz Policy Period”).

The judgment is structured as follows:

As regards the form of this judgment:

The First Appendix to this judgment sets out a list of the major players in this part of the litigation. I am grateful to the parties’ lawyers for preparing this document, which is annexed almost verbatim.

The Claimants are individuals all of whom availed themselves of the services of White & Co in respect of accountancy, investment and/or tax matters. Each is alleged to have relied on advice given either by White & Co itself or through another practice of Chartered Accountants, McKenzie Knight & Partners, in making investments. It is the Claimants’ case that these investments have all substantially failed. They contend that the advice was negligent and/or that secret commissions were paid.

White & Co was a practice of Chartered Accountants owned by Mr Benjamin White (“Mr White”) and Ms Emma Abbott (otherwise, Ms Emma Abbott-Rattray) (“Ms Abbott”). It went into administration on 27 March 2019 and into liquidation on 17 February 2020.

On 4 June 2017, Mr White and Ms Abbott acquired the business and practice of McKenzie Knight & Partners (“MKP”).

Allianz was White & Co’s professional indemnity insurer for the Allianz Policy Period pursuant to a policy of insurance (“the Allianz Policy”). Allianz was also MKP’s professional indemnity insurer for the same period.

The original Defendants [3] to [69] (“the ARP Defendants”) were the insurers for White & Co in the period following the Allianz Policy Period. The claim against them has been compromised.

There is reference within this litigation to investments in:

The EIS Investments involved the purchase of shares in new and/or small companies which were intended to qualify as eligible shares for the purposes of Section 150A and/or Section 150C of the Taxation of Chargeable Gains Act 1992 (“the 1992 Act”).

The qualifying company for this eligibility must meet a series of requirements, including currently:

The investor needs to comply with a series of requirements including:

Such investments needed to comply with various conditions of the Income Tax Act 2007 (“the 2007 Act”), including:

A risk to capital condition was introduced by the Finance Act 2018, which amended the 2007 Act to include a new Section 157A;

“(1)

The risk-to-capital condition is met if, having regard to all the circumstances existing at the time of the issue of the shares, it would be reasonable to conclude that—

(a)

the issuing company has objectives to grow and develop its trade in the long-term, and

(b)

there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.”

When Parliament introduced the risk to capital condition, the Explanatory Notes to the Bill which introduced it emphasised the purpose of the legislation in the following terms:

“The government intends the venture capital schemes (the EIS, SEIS and VCTs) to be focused on support for companies with high growth potential. The risk to capital condition is a principled approach to reduce opportunities to use the schemes for tax motivated investment. It will enable the government to avoid excluding further specific types of activity, which would risk excluding genuine entrepreneurial businesses.”

The tax consequence of investment in a vehicle that qualifies under the EIS scheme is conveniently explained by Mr Francis in his first report at [5.17]:

“The benefit for the investor is multifaceted because not only do they obtain investments in trading companies which are intended to increase in value (given the company must use the funds for the betterment of its trade). There are also a number of tax reliefs available under the EIS regime, which are often quoted in prospectuses and can be summarised as follows:

(a)

Income tax relief - provided a qualifying EIS investment is held for three years from the date of issue or three years from commencement of trade if later, an individual with no more than 30% interest in the company can reduce their income tax liability by an amount equal to 30% of the amount invested up to an investment limit of £1,000,000 (i.e. up to £300,000 income tax relief). In practice, a £100 investment would afford the investor the ability to claim EIS income tax relief of £30.

(b)

Capital gains tax exemption - provided that EIS relief is granted and not withdrawn by HMRC on qualifying shares, if the shares are disposed of after three years from the date of issue or three years from commencement of trade if later, then no capital gains tax is payable on the disposal of those qualifying shares.

(c)

Loss Relief – if EIS shares are disposed of at any time at a loss (after taking into account income tax relief) such loss can be offset, in the year of disposal or previous year, against the investor’s capital gains. or income, affording loss relief against income tax or capital gains tax.

(d)

Capital gains deferral relief - tax on capital gains realised on a different asset can be deferred, where disposal of that asset was less than 36 months before the EIS investment or less than twelve months after it.

(e)

Inheritance tax - EIS Investments are generally exempt from inheritance tax after two years of holding such investment.”

The practical advantage of such an investment from the point of view of many investors (including all of the Sample Claimants) was the entitlement to income tax relief at the time of investment, as a result of which a qualifying investment could give investors an immediate reduction (or often extinction) of an anticipated income tax liability and on some occasions a refund of tax already paid. In consequence, investments were typically calculated by reference to a tax liability.

Seed EIS Investments are a variant on EIS introduced by the Finance Act 2012 and intended to encourage investment in risker companies. For Seed EIS relief to be available, the risk-to-capital condition must be met, namely that, having regard to all the circumstances existing at the time of the issue of the shares, it would be reasonable to conclude that the issuing company has objectives to grow and develop its trade in the long-term, and there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.

For an issuing company to be a qualifying company in relation to the relevant shares for the Seed EIS scheme, it must meet the requirements that are broadly in line with the EIS legislation (Footnote: ⁵). In addition:

Like EIS investments, investments in Seed EIS vehicles had a variety of tax benefits of a similar nature for those of EIS investments, though, in the case of income tax relief, the benefit is even more generous in that it involves the potential to reduce income tax liability “by an amount equal to 50% of the amount invested up to an investment limit of £100,000 per annum per company and a total of (currently) £200,000 per investor per annum across their investments in S[eed] EIS companies (i.e. £100,000 income tax relief). In practice, a £100 investment would afford the investor the ability to claim SEIS income tax relief of £50. (Footnote: ⁶)” The practical advantage was thus even more favourable than investment in an EIS, albeit that the price is the risker nature of investments that might qualify under the Seed EIS scheme.

Super EIS Investments are a product that was described to one Claimant (Dr Sulaiman) in an email from Mr Cowman, the Managing Director of MKP of 16 March 2015 (Footnote: ⁷) (“the Sulaiman Email”) as follows:

“The Super EIS is unlike a standard EIS in that there is loan facility provided by a specialist bank, which allows you to claim relief on a gross investment that is approximately five times your net cash outlay; this effectively super-charges your tax relief. One of the reasons why the ultimate investment return from a Super EIS is unlikely to be particularly high is because the profits on the transaction are used to repay the loan (together with the majority of the interest and charges) before any surplus can be distributed to you, the investor.

The loan will be repaid from the proceeds of the sale of the Super EIS Company's underlying assets/rights. If for any reason these do not yield sufficient proceeds the guarantor will cover the repayment (in other words, you could not be called upon by the bank to pay them any additional funds).”

Mr Wentworth-May explains this scheme at [16] of his report of 9 August 2024 (Footnote: ⁸) as follows:

“16.1

each Claimant would use their own personal funds to make an EIS Investment in an Investee Company, with the same terms as described above in relation to “standalone” EIS Investments;

16.2

in addition to investing their own personal funds, each Claimant would enter into an agreement (the “Loan Agreement”) with a third party bank (the “Amorone Bank”)…

16.3

the Claimant would draw down additional funds under the Loan Agreement (the “SEIS Loan”). The Claimant would use the proceeds of the SEIS Loan to make a further EIS Investment (the “Loan EIS Investment”) in the Investee Company (the amount of this investment would be four to five times the amount of the EIS Investment to be made from the Claimant’s own personal funds). My understanding is that it was intended that the Claimants would direct the Amorone Bank to pay the proceeds of the SEIS Loan directly to the relevant Investee Company in satisfaction of the Claimant’s agreement with the Investee Company make the Loan EIS Investment (by way of a subscription for ordinary shares in the Investee Company);

16.4

I understand from the Sulaiman Email that repayment of the SEIS Loan was to be guaranteed (the “Loan Guarantee”), however I have not seen a copy of this Loan Guarantee; and

16.5

The Loan EIS Investment would have the effect of “super-charging” the tax relief for investors, and would allow them to claim tax relief that could potentially exceed the amount of their EIS Investment.”

Hence it can be seen that the Super EIS investments use the structure of EIS investments but involve a greater level of tax relief at no additional outlay to the investor.

In respect of Films Rights Business investments, Mr Wentworth-May explains that the investors received an information brochure about the films in which investments might be made, the potential returns and tax benefits and the “soft” benefits of investing in the film industry. He goes on:

“21.2

Each relevant Claimant who was making a FRB Investment would agree to enter into an Assignment of Film Rights Deed (“Film Rights Assignment”) with Film Rights Exchange Limited (“FRE”), a limited company incorporated in Guernsey for the assignment of certain film rights (“Film Rights”) to the Claimant;

21.3

The consideration payable for the assignment of the Film Rights would be funded from two sources (a) personal funds to be provided by the Claimant (the “Personal FRB Investment”); and (b) funds provided pursuant to the Claimant pursuant to a loan to be provided to the Claimant with the Amorone Bank (the “Loan FRB Investment”). From the information brochure, it appears that the intention was that a quarter of the funds for the acquisition of the Film Rights were to be provided from personal funds available to the Claimant, with three quarters of the funds to be provided from the proceeds of the FRB Loan...

21.4

Each Claimant would then acquire the relevant Film Rights. The intention was that each Claimant would, in relation to the acquired Film Rights, carry on a trade of producing and distributing the relevant film as a sole trader (“Film Rights Trade”). The example calculations set out in the information brochure in relation to the FRB Business suggest that the Claimant would, in the accounts of their Film Rights Trade, immediately claim an 85% write-down in the value of the Film Rights. The calculation suggests that the amount of this write-down would be available as a deduction in calculating the profits of the Film Rights Trade for income tax purposes.”

Pausing at this point in the examination of the investments, it will be seen that all four types of investment considered so far, EIS, Seed EIS, Super EIS and FRB, involve the investor obtaining tax relief at the outset of their investment. It is apparent from the witnesses who gave evidence in the Coverage Trial that the tax planning implications of these investments was a prominent issue in how they were marketed and indeed played a central role in the decision of individual investors as to whether or not to invest. This evidence is summarised by Allianz in the first Schedule to its closing submissions.

If the Claimants are correct in their assertion that White & Co gave inadequate advice in respect of such tax matters, the effect on the individual investor would depend on exactly how they had invested, but in each case the inadequacy of that advice would be the potential cause of loss to the investor. Thus, there is a degree of similarity between all four of these investments in so far as their attractiveness depends on the examination of the tax implications for the investor.

DJI Investments involve individual investors subscribing for ordinary shares in BNN Technologies PLC, a limited company marked as being listed on NASDAQ (Footnote: ⁹), which carried out a gambling business.

Investments in Ober are described in the expert evidence as being of two types:

Bond Investments involved investors lending money to fund businesses, the loan carrying simple interest.

The Claimants say that, apart from the similarity of the first four categories of investment referred to above at [11], all seven categories of investment share the feature that they were high risk investments in which the investors were inadequately warned of the risks.

The Allianz Policy included the following relevant clauses:

It is agreed that the minimum policy wording of the Institute of Chartered Accountants in England and Wales dated 12 August 2016 was in force throughout the period of the Allianz Policy and that, in consequence, White & Co (and standing in the shoes of the insured under the Third Party Rights against Insurers Act 2010 (Footnote: ¹⁶), the Claimants) are entitled to rely on the 2016 Minimum Terms if those terms are more favourable to the insured than the Allianz Policy. Condition 2.2 of the 2016 Minimum Terms (“the Minimum Term”) provides:

“If during the Period of Insurance the Insured becomes aware of any circumstance which may give rise to a Claim, the Insured shall give notice in writing of such circumstance to Insurers as soon as reasonably practicable and in any event not later than the last day of the Period of Insurance. Any Claim arising from such circumstance shall be deemed to have been first made in the Period of Insurance.”

The claim was issued on 25 May 2021, naming White & Co, Allianz and the ARP Defendants as Defendants to the claim. The Schedule to the Claim Form identified 176 Claimants, all of whom were said to have made investments in reliance on advice from White & Co. The claim was put in the Brief Details of Claim at [6] as one for “damages and/or equitable compensation for breach of contract and/or breach of duty or negligence and/or breach of fiduciary duty and/or misrepresentation and/or negligent misstatement arising out of work carried out or advice or services tendered or representations made by [White & Co] as accountants and professional advisors in connection with investment and tax affairs.”

The claim against Allianz and the ARP Defendants was brought under the Third Party under the 2010 Act, pursuant to which a person with a claim against an insured person may stand in place of the insured for a corresponding claim against the insurer for indemnity under the insurance policy. The claim did not proceed against White & Co because of its insolvency but progressed against Allianz and the ARP Defendants until the claim against the latter was settled.

The parties’ Statements of Case have been amended at various points in the proceedings. By the time of trial, the relevant documents were:

It was common ground at trial that the Claimants need to amend the Particulars of Claim yet further adequately to deal with what are called below the November emails and to tidy up certain matters that are no longer in issue. A proposed Re-Re-Amended Particulars of Claim has been filed by the Claimants and Allianz agrees to the amendment. It appears in the bundle at A/10.2/1ff. As I indicated during closing submissions, I will grant permission to amend in this form with permission to file a further amended Defence and further amended Reply if so advised.

The parties had also served Part 18 Requests and responses to the Second Defendant’s requests of the Claimants dated 25 March 2022 and 24 July 2023 were before the court.

The Claimants’ case, by way of overview, is put thus in paragraph 3 of their closing submissions:

“(1)

The claims as pleaded include Seed EIS Investments and investments in Ober Private Clients Limited.

(2)

[White & Co] was aware that it had advised its clients in respect of each the Investments and that there may be claims by any such client. Crucially, allegations had already been made as to alleged negligent tax and investment advice, which [White & Co] would know could have been similarly applicable to any other client receiving similar advice.

(3)

A reasonable person, with all the background knowledge which would reasonably have been available to Allianz, would have understood the notifications to be notifications of circumstances to the effect that there may be claims by any of [White & Co’s] clients on a similar basis to the allegations that had already been made as to alleged negligent tax and investment advice. By way of example, the First November 2017 Email notes that Mr Levy, “is also still actively seeking to recruit further potential Claimants, though no further individuals have been named specifically at this stage.” It is submitted that the Claimants in due course became those further potential Claimants. Indeed, the potential breadth of such claims was also referred to in the First November 2018 Emails as it is noted that Mr Levy, “has apparently looked into c.90 EIS companies with which the Insured are supposedly involved. His position is that c. £97,000,000 of investments has been procured, but only 3 of the companies show any profit.” (“the Investment Companies”).

(4)

There is a causal connection between the notified circumstances and each of the Claimants’ claims as they were [White & Co’s] clients with similar allegations to those which had already been made as to alleged negligent tax and investment advice.

(5)

If the Ober Exclusion is only relied upon by Allianz to reiterate the insuring clause in the policy, then it adds nothing and does not need to be construed any further.

(6)

The Allocation Provision is inconsistent with the 2016 Minimum Terms as the Allocation Provision would not allow for full recovery where the same loss is concurrently caused by both covered and uncovered matters. However, the Claimants agree that this is academic in circumstances in which no claim is made against an uninsured entity.

(7)

The Tax Mitigation Endorsement is of no effect in respect of regular EIS Investments regular Seed EIS Investments and the shares of the Super EIS Investments paid for with the Claimants’ capital rather than by way of a loan.

(8)

The Related Claims Provision does not operate to aggregate claims which are themselves notified circumstances. In the alternative, the Claimants’ claims are not Related Claims as they are not the same Claims (as distinct from being similar Claims). In the further alternative, if the Related Claims Provision does apply, then it operates to provide a £2,000,000 limit in respect of each of the Investment Companies.”

The Claimants consider the issue of awareness in three categories:

The Claimants contend in their written closing submissions at [23.1] that White & Co were, in general terms, aware of the following:

More specifically in RAPOC at [35.1.3] it is said of the Akbar Letters that they gave rise to relevant awareness within the meaning of the 2016 Minimum Terms, namely:

“that it may be claimed by individuals or entities advised by [White & Co] in respect of investments relating to EIS Investments and/or SEIS Investments and/or FRB Investments and/or Bond Investments and/or DJI Investments and/or similar investments that the advice was negligent. The said circumstances related to:

(1)

Investments in the companies listed in the Akbar Letters;

(2)

Investments in EIS Investments and/or SEIS Investments and/or FRB Investments being the types of investments expressly mentioned

(3)

(By virtue of [White & Co’s] advice in respect of the companies referred to in the Akbar Letters being typical of [White & Co’s] advice in respect of other companies) the said circumstances also related to any similar investments in which [White & Co] gave similar advice; and.

(4)

Any Bond Investments and/or DJI Investments which had been the subject of similar advice (including similar representations as to Mr White’s expertise and track record).”

As to the alleged Block Notification by the 1 June Letter, the 6 June Email and the 29 June Email, the Claimants’ case is pleaded thus in RAPOC at [35.3]:

“By virtue of the Block Notification, [White & Co] was aware of circumstances that may give rise to a “Claim” within the meaning of the 2016 Minimum Terms; namely that the First Defendant had advised clients in respect of enterprise investment schemes (being the EIS Investments and the SEIS Investments) and/or FRB Investments and/or Bond Investments and/or DJI Investments and that such advice may have been negligent. The said circumstances relate to:

(1)

The EIS Investments and SEIS Investments which were identified in the Block Notification;

(2)

Any similar EIS Investments and SEIS Investments being the types of investments expressly mentioned and/or which had been the subject of similar advice.

(3)

Any Bond Investments and/or DJI Investments which had been the subject of similar advice (including similar representations as to Mr White’s expertise and track record).”

Of the Kennedys Documents, it is asserted in RAPOC at [35.6.4] that these made White & Co aware of:

“circumstances that may give rise to a claim; namely, that it may be claimed by clients or former clients that its advice in respect of investments relating to EIS Investments and/or SEIS Investments and/or Bond Investments and/or FRB Investments and/or Bond Investments and/or DJI Investments and/or similar investments was negligent. Although the First Defendant was not itself a party to the correspondence constituting the Kennedys Documents, it is to be inferred that the First Defendant received copies of the same by virtue of Kennedys acting as the First Defendant’s solicitor. For the avoidance of doubt, the said circumstances related to:

(1)

Investments in the companies listed in the Kennedys Documents;

(2)

Investments in EIS Investments and/or SEIS Investments and/or FRB Investments and/or Bond Investments, being the types of investments expressly mentioned;

(3)

(By virtue of the First Defendant’s advice in respect of the companies referred to in the Kennedys Documents being typical of the First Defendant’s advice in respect of other companies) any similar investments in which the First Defendant gave similar advice;

(4)

Advice in respect of Investments given by the First Defendant to the individuals or entities listed on the Spreadsheet under the sheet titled “Shareholders;” and

(5)

Any Bond Investments and/or DJI Investments which had been the subject of similar advice (including similar representations as to Mr White’s expertise and track record).”

However, whilst awareness of the matters referred to at [40] above is a necessary pre-cursor to valid notification (because one cannot notify that of which one is not aware) it will ultimately only be those matters that are in fact notified that will be relevant to whether a claim has been notified. In oral submissions, Mr Chapman KC, having dealt the awareness of White & Co, accepted that “if that awareness doesn’t make its way into the notification then the scope of the notification is probably going to be determinative of where it goes from there…If the awareness that gives rise to the notification and is shown on the notification is itself enough to show that it may give rise to a claim by its very nature … then any wider awareness ... falls away into the ether. (Footnote: ¹⁷)”

The Claimants assert in their closing submissions at [23.2] that the Akbar Letters, the Block Notification and the Kennedys Documents (individually and in combination in the sense that previous notifications are part of the factual matrix for later notifications) are to be construed as notifying Allianz of the following circumstances:

The Claimants deny that the claims brought in this case fall within the Tax Mitigation Endorsement or that the Related Claims provision applies to some or all of the claims.

In brief, Allianz contends that:

Allianz also raises anterior questions about the scope of the pleaded case, in particular as to whether the Claimants’ pleaded case is capable of including within it claims relating to Seed EIS Investments and claims relating to Ober Private Clients Ltd.

The parties set out in their written closing submissions (Footnote: ¹⁹) the relevant law to be applied to a notification provision such as that with which we are concerned in this case (whether pursuant to the clause of the policy cited at [32(1)] above or pursuant to the Minimum Term cited at [33]).

There is no dispute as to the fundamental principles which, so far as is applicable here, can be drawn from the judgment of Gloster LJ in Euro Pools plc (in Administration) v Royal & Sun Alliance Insurance plc [2019] EWCA Civ 808 and the cases she refers to therein. These can be summarised as follows:

The Claimants contend in their written submissions that other matters should be borne in mind:

Allianz applies the same principles to summarise the relevant questions that the court needs to ask about any particular alleged notification as follows:

On the facts of this case, these questions give rise to consideration of the following matters:

In oral submissions, Ms Dixon KC for Allianz expanded on her argument in closing written submissions by contending that the court should be astute not to import awareness by the insured of facts that might be relevant to notification into the scope of the notification itself. A hypothetical personal injury barrister who habitually advised that adult claimants with capacity had 4 years in which to bring a personal injury claim would not, by notifying their insurer of a particular threatened claim for damages for losses caused by such negligent advice have at the same time notified their insurer of other claims where they had given the same advice merely by their own knowledge that they had given similar advice on other occasions. To put the point another way, subjective awareness of circumstances by the insured will not fall within the scope of notification unless there is objective notification of the relevant circumstances to the insurer.

Notification in strict accordance with its terms may be a precondition to liability under the Policy or under the Minimum Term, following [114] in the judgment of Rix LJ in the Court of Appeal in Kidsons, because:

In essence, Allianz’s manner of putting the relevant questions for the court to decide follows the same structure of “awareness, notification and causation” to which Henshaw J referred in Cultural Foundation, merely subdividing the “notification” issue so as to consider the manner and the scope of notification as separate issues. Since the question of notification will always at least in principle include consideration both of its manner and of its scope, I see no material difference between the approach adopted by the Claimants and that adopted by the Defendant. In this case, the scope of the alleged notification is in particular in issue. Indeed, as Mr Chapman KC identified in closing submissions, the “related claims” issue in the Schedule of Issues referred to below at SOI[24] raises a particular question about the scope of notification that was given - even if it was given in the appropriate manner, did it cover the “Related Claims”? Thus I see benefit in adopting Allianz’s approach of subdividing the issue, even if there is no ultimate difference on the two approaches since both would involve asking the same questions.

As to whether notification can be given by someone other than the policyholder, my attention is drawn to a passage from Colinvaux’s Law of Insurance, 13^th Edition at [10-020] dealing with the somewhat controversial judgment of the Court of Appeal in what is there called Lickiss v Milestone Motor Policies at Lloyd’s (Footnote: ²¹) [1966] 1 WLR 1344:

“By whom must notice be given? Most notification of loss clauses specify that notice must be given by the assured. It is nevertheless arguable that such wording is adopted simply because the assured will normally be the appropriate person to give notice, and that the insurers’ intention is not to impose a personal obligation on the assured. It was thus held in Lickiss v Milestone Motor Policies at Lloyd’s that the assured’s obligation under a motor policy to notify the insurer of any accident and of any notice of intended prosecution served on him by the police, had been satisfied where the relevant information had been provided to the insurer by the victim’s insurers and the police. In the view of Lord Denning, “law never compels a person to do that which is useless and unnecessary.” Salmon LJ, dissenting on this point, preferred the construction that the obligation to notify was personal to the assured. If the majority view in Lickiss is good law, it is certainly to be confined to the situation in which the reliability of the notification is beyond doubt. It may also be that if the insurers themselves have actual knowledge of the loss then notification to them is not required (Abel v Potts (1800) 3 Esp 242 (Footnote: ²²)). It may be noted that Lickiss was distinguished in AXA Insurance UK Plc v Thermonex Ltd (Footnote: ²³) where notification was not given by the assured but rather by a third party claimant against the assured after the assured had become insolvent. The court’s view was that the clause by its terms (“you”) required notification by the assured personally. The comments were obiter, as the requirement for immediate notification had plainly not been complied with, but it does throw some doubt onto the principle in Lickiss. To the contrary, it has been suggested in Australia that if insurers have received reliable information of a potential claim against the assured—e.g. from solicitors appointed by the insurers to defend any proceedings—they would be acting in breach of the duty of utmost good faith in relying upon a failure by the assured to notify.”

It will be noted that this passage expressed doubt about the ambit of the ratio in Barrett Bros (Taxis) v Davies. This doubt is reflected in several places:

The Claimants’ case on notification turns on a series of communications on their behalf defined as:

It is apparent from the review of the law above that the parties need to address not only what was communicated to Allianz as insurer but the awareness of White & Co as the insured. The Claimants contend that this involves looking at the various documents that are said to amount to notification in context, including considering documents sent later in time than the notification documents themselves. For this reason, this section of the judgment identifies and considers each of the documents that is said to amount to notification in the wider context to which the Claimants point.

For a considerable period of this case, the Claimants instructed Mr Michael Levy, a barrister with appropriate authorisation to conduct litigation. Mr Levy was also instructed on behalf of a separate group of investors who alleged breach of duty on the part of White & Co and/or Mr White and issued a claim. The lead named claimant was a Mr Akbar and this claim has been called “the Akbar Claim” within this litigation.

On 27 March 2017, Mr Levy sent a letter (“the March Letter” (Footnote: ²⁴)) to White & Co on behalf of 8 named people (who formed some of the claimants in the Akbar Claim and who have consequently been called “the Initial Akbar Claimants”). The letter said that White & Co had advised these people regarding investments into 14 named companies between 2012 and 2014. It alleged that the advice given by White & Co was “inaccurate and/or deceitful, and/or negligent, and/or in breach of professional duty, and/or in breach of fiduciary duty.” The letter requested a full account of the investments made in the named companies “as well as details of all transactions carried out by the companies in which they have invested including full access to all company records and accounts.” The letter threatened that, if adequate information was not provided, proceedings would be commenced for “pre-action discovery as well as action for negligence, breach of contract, breach of fiduciary duty and deceit” in which the Initial Akbar Claimants would be “seeking damages and/or restitution and or other relief.” A list of investments made by the Initial Akbar Claimants was provided.

By email dated 5 April 2017, McParland Finn Ltd (“MFL”), White & Co’s insurance brokers, sent a copy of the March Letter to Allianz. The email subject heading is “Re: White & Company Ltd – Akbar et al (New Notification).” Its text states,

“In view of the circumstances, it would appear 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 to MFL by email on 10 April 2017, stating:

“Thank you for your email of 5 April 2017 with details of this new notification. I have noted this against the Insured’s 2016/2017 policy but will need further information in order to confirm formal acceptance….

I note that the Insured acted for the 8 individuals noted in [the March Letter]. I understand each of them wishes to bring a claim. Until we know more details about the claims I am unable to confirm how many claims (as defined by the policy) are being made.

The letter received from Elite is vague and makes a range of allegations without providing any substantive evidence for such claims.”

Allianz went on to propose that White & Co should respond to Mr Levy stating that the allegations were vague and unparticularised and that, if the Initial Akbar Claimants wanted to take matters further, they should provide a Letter of Claim that complied with the Professional Negligence Pre-Action Protocol.

In the meantime, on 9 April 2017, Mr Levy, on behalf of the Akbar Claimants, wrote again to White & Co (“the 9 April Letter” (Footnote: ²⁵)) including an unsigned witness statement from Mr Levy (“the Levy Witness Statement” (Footnote: ²⁶)). The letter was headed “Claim against White and Co for negligent accounting advice” and identified the client as “Mr Javed Akbar and others.” It would appear that White & Co had not in fact acted on the suggestion from Allianz to respond to the March Letter by this time because the 9 April Letter begins with the statement that a reply had not been received to the March Letter. It goes on to state that Mr Levy had been instructed “to commence proceedings for pre-action disclosure,” in support of which prospective application, he attached a witness statement and draft Particulars of Claim. The Levy Witness Statement identified the prospective claimants as the Initial Akbar Claimants and the prospective defendants as Mr White and White & Co. It annexed draft Particulars of Claim. It contained a list of companies, including 9 of the 14 identified in the 27 March Letter, in which companies it was said that White & Co had advised the Initial Akbar Claimants to invest. The Levy Witness Statement went on to set out certain facts about the 9 companies. It asserted that none of the Initial Akbar Claimants had been able to obtain any tax benefit from the investments, but had instead faced fines from HMRC and paid out for separate accountancy advice. The statement ended with a request for information from White & Co, including “the nature and value of each investment recommended by the defendants” and “all correspondence between the claimants and defendants.” It exhibited in total 36 documents.

The parties have together called the March Letter and/or 9 April Letter, (together with the Levy Witness Statement included with the latter) “the Akbar Letters”.

It is apparent that White & Co contacted MFL about the 9 April Letter and, by email on 10 April 2017, MFL wrote to Allianz about it. The email set out some text from the letter and attached the Levy Witness Statement. MFL ended by saying: “While it would appear that the appropriate course of action would be to reply along the lines set out in the recent email, I would be grateful for any comments you may have in this instance.”

On 13 April 2017, Allianz sent an email to Mills and Reeve LLP (“Mills & Reeve”) a firm of solicitors (Footnote: ²⁷), in these terms:

“Insured: White & Company

Claimants: [the Initial Akbar Claimants]

Policy Period: 2016/2017

Our reference: GBFF01790317

This matter has been notified against the Insured’s 2016/2017 policy…As you will see from the emails attached, we have not formed a view on the number of claims which have been made… The Insured (an accountant) has received a number of letters from Elite Chambers acting for all of the Claimants. The claims made are un-particularised but pre-action disclosure application (and issue of proceedings) have been threatened. I would be grateful if you could investigate this with the Insured in the usual way and respond to Elite Chambers. “

On 24 April 2017, Mr Levy, again on behalf of the Akbar Claimants, wrote to Mills & Reeve (“the 24 April Letter” (Footnote: ²⁸)). In that letter, Mr Levy stated, amongst other things:

“You have received full information to notify your client that something is seriously amiss.

•

Your client through Mr White advised my clients that the investments that he advised would allow them to obtain tax benefits.

•

He has stated that the tax benefit would be immediate.

•

The tax benefits did not materialise.

•

My clients have been subject to great expense in resolving their tax issues. Your client is fully aware of this.

•

Your client through Mr White has stated that the investments that he recommended would be sound and good investments.

…

“The practice of your client bears all the hallmarks of an attempt to gain tax benefits for the investors and the companies in which they invest, but in a manner which is not legally possible for the investors.”

Mr Levy also indicated a complaint would be made to the Institute of Chartered Accountants in England and Wales and repeated a request for “full disclosure of your client’s involvement in each of the companies in which my clients have invested.”

On 28 December 2017, the Akbar Claim was issued. The named claimants were the Initial Akbar Claimants together with three additional claimants who had not previously been referred to. The brief details of claim stated:

“The Claimants claim damages and losses resulting from and ancillary to making various investments under various “schemes” pursuant to the Defendants’ misrepresentations, negligent mis-statement and/or culpably bad advice, being advice given by the Defendant in breach of their common law, contractual and/or fiduciary duties and/or professional duties.”

In 2017, it would appear that White & Co and/or MKP received an enquiry from HMRC relating to claims for EIS relief that had been made before schemes had been formally authorised by HMRC as qualifying for relief. On 1 June 2017, JMW solicitors, acting according to the face of the letter for both White & Co and MKP, wrote to MFL, their clients’ insurance brokers (“the 1 June Letter” (Footnote: ²⁹)). That letter stated, amongst other things:

“We have been instructed by the above named to advise in relation to an HMRC enquiry. Please accept this letter as notification of potential claims in compliance with the terms of the policies. The following information is supplied to address the requirements at page 10 and the heading “Circumstances” in the policy document.

(i)

The client companies advise and assist their own clients in the submission of applications to HMRC for tax relief under the government’s Enterprise Investment Scheme. Once a particular application is authorised, tax relief may be claimed for the relevant period. HMRC question whether our client was correct when advising that relief may be claimed before formal authorisation is given. It is said that even though the applications were likely to be granted, the applicants obtained tax relief from an earlier point, thereby committing an offence attracting a penalty. Our clients do not accept HMRC’s interpretation of accepted practice and procedure on this point and seek advice on how they might defend or mitigate against the HMRC penalties now applied to a number of applicants. The cases under investigation are those where McKenzie Knight and Partners Ltd advised. Cases involving advice provided by White and Company (UK) Ltd may be investigated in due course.

(ii)

Our clients have received correspondence from applicants who are now obliged to pay HMRC penalties, including interest, even though they may ultimately be entitled to the tax relief. The applicants ask our clients to indemnify them in respect of the penalties, interest and potential related loss. Further investigation will be required to identify the full scope of the claims.

(iii)

The number of potential claims by complainant applicants is under consideration, but the sums involved may exceed the stated excess in each policy. The identity of each claimant can be provided in the course of determining quantum.

(iv)

The identity of any insured for the purposes of the claims will be – McKenzie Knight and Partners Ltd, White and Company (UK) Ltd, Ben White and Emma Abbott.”

By email of the same day (1 June 2017), MFL requested further information. On 6 June 2017, JMW replied by email to MFL (“the 6 June Email” (Footnote: ³⁰)), stating:

“We met with the directors on 2nd June to discuss developments, Ben White in particular has been liaising with investors and is now confident that those who originally notified their intention to claim compensation from White and Co/McKenzie Knight are happy for our clients to speak with HMRC on their behalf to find a solution. Our clients say that there has been no dishonesty on their part. They acted in good faith when advising investors that they could claim tax relief before receiving formal authority from HMRC, who take issue with the timing of the claims, not the eligibility for tax relief itself. Consequently, our clients wish to speak with HMRC to determine whether it was reasonable for them to impose financial penalties on investors in respect of claims where the investor obtained tax relief earlier than they were entitled to obtain it. Our clients say that whilst some inspectors were content to postpone enforcement action pending receipt of the EIS3 (the formal authority), other inspectors proceeded to impose penalties. Our clients are in the process of arranging a meeting with the inspector conducting the investigation and it is proposed that we attend the meeting to advise on how enforcement might be avoided or limited. This will have an impact on how we answer the questions in your email 1st June. I stress that no admissions will be made during that meeting. We regard it as a meeting at which we may clarify HMRC’s position and advise on the level of risk faced by our clients and the insurer.”

On the same day (6 June 2017), MFL emailed Allianz twice (Footnote: ³¹). The email subject was: “Re: White & Company Ltd – EIS Investments (New Notification).” MFL attached a copy of the 1 June 2017 Letter and the subsequent exchange of emails between JMW and MFL. The email stated that further information had been requested from White & Co and/or JMW “in order to support the notification” and requested that Allianz “note this matter against the current policy and let me have your comments in due course.” The second email was identical save that the email was headed “Re: McKenzie Knight & Partners Ltd – EIS Investments (New Notification).”

On 13 June 2017, by emails timed 08:40 (Footnote: ³²) and 08:42 (Footnote: ³³), Allianz responded to each of MFL’s emails in identical terms, stating: “the queries raised in your email dated 01 June 2017 are helpful and I await sight of the documents requested before considering policy response.”

On 29 June 2017, JMW further emailed MFL (“the 29 June Email” (Footnote: ³⁴)). That email attached an email from Ms Abbott (Footnote: ³⁵) which included a spreadsheet, headed “MKP Summary for insurers” (Footnote: ³⁶) which comprised a summary of MKP’s clients who were currently being investigated by HMRC in relation to their claims for EIS relief having been made prior to the relevant EIS3 Certificates being issued. In the email, Ms Abbott email stated amongst other things:

“At the current date the clients affected solely relate to [MKP] clients, accordingly no details have been provided for White & Company as we consider no notification is required.”

Later on 29 June 2017, MFL emailed Allianz (Footnote: ³⁷), stating

“I write with reference to the previous correspondence in connection with both Insured noted above (Footnote: ³⁸)and the ‘Blanket Notifications’.

In response to the request for further information regarding these matters, I have now received the attached copy correspondence from JMW Solicitors LLP.”

The parties have referred to the 1 June Letter, the 6 June Email and the 29 June Email together as “the Block Notification.” The Claimants contend that those documents were annexed to the email of 29 June 2017.

I note in passing that, by the time of the receipt of these communications, White & Co had also received n email from Dr Dipankar Bose, a Claimant in the instant case, which was dated 25 May 2017 (Footnote: ³⁹). I set this out in full since it is the most full and contemporary account of a complaint from a Claimant in this action to which my attention has been drawn and it is of relevance to some of the conclusions below.

“I just wanted to inform you that I have paid the HMRC the total tax demanded and the penalty too. My big anxiety is the other EIS schemes I have subscribed to in year 2016-17 tax year and certainly I have not received EIS-3 certificates for all of them yet. I am worried that I might not have funds to pay back the tax return and subsequent penalty for those investments too.

I have taken advice and I am very clear that there is still a possibility of getting the tax relief if you all can persuade the HMRC to issue you the EIS-3, 1 have also been told in no unclear terms that as the rules have been broken regarding the claiming back of the tax return before the EIS-3 certificate was issued, in no circumstances would the penalty be refunded or reduced. Even if I get my refund on the tax return, I could still be asked to pay the interest.

I am one of your customers and have been given professional advice by your company to make these investments. Your company has charged me handsomely for the advice in getting and setting up the investment, accountant fees and have also staked claim on my future earnings. I was informed that I can lose my entire invested sum as a result of these EIS schemes and I had agreed to take that risk. I have also been told that these investments were approved for EIS and qualified for the tax exemptions. You being a professional accountant took that responsibility of applying for the tax rebates as per the law of the land. At no point, I repeat; AT NO POINT, was I ever told that there was still a risk that these might not qualify for EIS rebates and risk being penalised for claiming tax returns early. I had absolutely no doubt about the advice you gave me and the claims made to me about the benefits of these schemes. At no time I thought that I would be penalised by HMRC for the professional advice and the tax returned by the HMRC based on the returns filed by your company. The one and only one risk I took was failure of the investment and in that case I still had a reduced liability as a result of the rebate from the HMRC.

I am a hard working doctor and every penny I have saved is as a result of the hard work I have done. The money I have invested is not by playing the market or by running profit making businesses. I am also near the end of my professional career and do not have much opportunities to carry on earning for many years. I certainly feel very much let down by your company and the advice given. I have no doubts that you, Christine and Charlotte are working very hard to make amends and get back the tax return and I thank you for that effort.

The bottom line is, although I had to pay the tax which i thought I had saved and I am able to at this stage accept that. Certainly I do not feel that I should be penalised for the actions of your company in putting me in this situation. You could have easily asked us to make the investment on the principles that the tax can only be claimed back after the EIS-3 has been received and the risks of not being issued with one. I could have then analysed the risks and decided if they are worth taking or not. I can clearly see that the risks were taken by your company without any information to me as a customer, on whose behalf you have made the tax refund claims. I was never made aware of these facts that it was not permissible according to the rules of HMRC. I can see that you have changed your procedures this year and made us all aware of it now. So clearly I cannot be held responsible for breaking the law, hence the penalty.

I would urge you as a responsible person to help me out in these times of need and own up to the responsibility of paying the penalty. We can deal with the effect of the tax return at a later date.

As it is possible that you or your company do not have adequate funds to cover the losses of all your clients, I shall be grateful if you let me know the name of your insurer who indemnity your practice with your policy details, as I do not wish to be left with no ends to latch on to if you decide to down the shutter one day. I would also like to be educated by you as to how should I put in a complaint or other legal course or arbitration if I do not agree with your decisions on the long run. I sincerely hope that we would not have the need for any of these agencies.

I do wish to tell you that I have been with McKenzie Knight and Partners since 1996 and have received a fantastic service by them and do wish you to carry on handling my tax matters. I am probably one of your longest loyal client. I want you to know that I still have faith in you and I know that you are doing your best to get the most favorable outcome from this all.”

Mr White responded by email of 31 May 2017 (Footnote: ⁴⁰), stating amongst other things:

As noted above, Kennedys took over conduct of the Akbar Claim on behalf of White & Co in June 2017. Ms Bushen of Kennedys gives evidence in her witness statement at [4] – [5] that Kennedys was instructed in relation to the Initial Akbar Claimants’ claim (only) on around 7 June 2017, after which Kennedys sent a client care letter to White & Co in respect of that claim (Footnote: ⁴¹). The letter identifies that “Kennedys has been appointed by White & Company’s professional indemnity insurers, Allianz (“Insurers”) to act on behalf of White & Compony in relation to the claim pursued by Mr Akbar and others. The purpose of this letter is to explain the basis upon which Kennedys will act… Kennedys has been retained to investigate and defend this claim and to report to Insurers on liability and strategy…Kennedys is instructed subject to the terms and conditions of the Policy, which governs the relations between White & Company and your Insurers. These terms and condition, so far as relevant, are incorporated into Kennedys’ contract with White & Company…”

Mr Levy wrote to Kennedys on 10 July 2017 (“the July Letter” (Footnote: ⁴²)). That letter sought information as to the film rights acquired by a list of named people. It is headed

“My Client: White and Co. Clients

Litigation: Claim against White and Co for negligent accounting advice

Your client: White and Co.”

It goes on:

“I have not heard from you since our conversation of 12 June.

I am continuing to gather information concerning the investment made by my clients.

In the interim, please provide full details regarding the film rights acquired by my clients on the following dates.”

[Information as to the clients, amount invested and dates is then given]

“At this stage, please provide details of the film and the relevant territory in each case.”

Mr Levy wrote to Kennedys on 19 October 2017 (“the 19 October Letter” (Footnote: ⁴³)). In the letter, Mr Levy sought further disclosure and alleged that White & Co had been negligent in giving advice in relation to investments in EIS and FRB schemes. He stated, amongst other things:

“ALLEGATIONS

For the purposes of a letter before claim, my clients normally (Footnote: ⁴⁴) make the following allegations.

…

BREACHES OF DUTY

19.

Your client has acted in conflict of interest in that it has offered services an agent of my clients in assessing investment opportunities whilst your client has stood to benefit from the investment.

a.

Your client has failed to disclose all benefits that your client has had from each investment. Nonetheless, a reasonable assessment of the overall conduct of your client's business activities leads a reasonable minded third-party to the inevitable conclusion that your client has not acted in good faith and has concealed benefits that it has received as a result of each investment.

20.

Your client has repeatedly misrepresented that investments presented by your client will be likely to provide profit and benefits to my clients when objectively this was not the case as demonstrated by the uniform failure of investments to provide benefits to investors.

…

26.

Your client has represented by way of publicity material that it has a history of success in advising in EIS investments when the majority of the investments advised if not all make losses for the investor.

…

EIS Investments

47.

My clients have made various investments in EIS schemes. In no cases have my clients received a dividend, and in all cases my clients have been unable to recover this investment.

48.

It is clear from taking a broad view of all the schemes into which your client has advised investment, that the pattern is of unrelieved failure and is so consistent as to demonstrate utter disregard for the financial welfare of my clients or, indeed, of any other clients.

49.

My clients have investigated the following companies by way of reference to their submitted accounts and returns on Companies House (Footnote: ⁴⁵).

...

50.

Of all of them, only three make a profit at all, and that is only a paper profit. In each of the three companies, the debtors who owe money to the company form the entirety of the positive assets. It seems likely based on the form of the other companies that these debtors will turn into bad debts in time resulting in a 100% record of loss throughout all companies in which your client has advised investment in the time period at which we are looking.

51.

This contrasts with the presentations made by your client directly or through its sister company, OBER, or through other publicity material such as a report by Hardman & Co, which is freely available on the Internet and represents that there is an almost uniform record of success with only three failures out of the past 70.

…”

Mr Levy further wrote to Kennedys by letter dated 22 October 2017 (Footnote: ⁴⁶) (“the 22 October Letter”) enclosing a copy of a letter dated 11 August 2017 (Footnote: ⁴⁷) (“the Freeman Fisher Letter”) from Mr Levy to Freeman Fisher (solicitors acting for White & Co in respect of an allegation that Mr Levy had defamed White & Co in a letter dated 4 August 2017). The Freeman Fisher Letter includes the following passage:

“Please find below my response to the allegation of defamation…

Please note that all statements made by me to which you refer have come either from my discussions with clients in the course of privileged professional dealings, witnesses who have been identified as a result of investigation and who have chosen to contact me in response to letters written to them, and as a result of examination of documents in the public domain.

I have sought comments from other investors. I have had several who have shared the same experiences of loss. I have had none that have disagreed…

The analysis of the records on Companies House produces the following summary of companies that we have identified have been the subject of recommendations by White & Co as sound investments.

Number of Companies 77

Companies showing a profit 3

Companies showing a loss 43

Of those companies showing a profit, number where debtors are greater than profits. 3

No Accounts Yet 31

Total lost £36,708,804.00

Debtors £26,245,157.00

This contrasts markedly with supposedly independent reports that would seem to indicate that White & Co has a track record of advising on sound investments.

Having looked into the directors of those companies, those who figure most prominently have unenviable track records of several directorships of companies that lose money repeatedly

…

I must conclude that no due diligence was taken whatsoever into the companies or into the history of the directors with disastrous results for my clients and for others.”

Mr Levy attended a meeting at Kennedys’ offices on 21 November 2017 (“the November Meeting”) and asserts that during this meeting he provided a spreadsheet (“the Spreadsheet”). Whether or not the Spreadsheet was provided by Mr Levy to Kennedys has been the subject of heated dispute and evidence was to be adduced on this issue. In the event, the Claimants conceded that whether the Spreadsheet was handed over to Kennedys is not relevant to the issues in the preliminary trial and therefore it was unnecessary to hear evidence on the issue or to resolve it.

On 23 November 2017, Kennedys emailed Allianz twice:

On the same day (23 November 2017), Kennedys emailed White & Co at 15.45 (“the Second November Email” (Footnote: ⁴⁹)), stating,

“I just wanted to let you have a brief update on the above matter following Ben’s call with Claire earlier today.

The primary purpose of our meeting with Mr Levy (Footnote: ⁵⁰) was to allow him to present his Clients’ case as it stands to us, as he has yet to put forward any formal allegations against White & Co. At the meeting, Mr Levy presented us with a copy of a Letter of Claim, which he said was sent a couple of weeks ago, but which we have not received. A copy is attached for your reference.

….

Mr Levy appreciates that we are currently in the process of trawling through c35,000 emails/documents in order to complete the disclosure exercise, which has been a more extensive task than we had initially expected. However, he is acutely conscious that some of the investments complained of were entered into in early January 2012, so limitation will be due to expire shortly. On that basis, he is currently working on preparing proceedings. However, he has indicated that he would prefer to enter into a standstill agreement (which would stop time running for limitation purpose)s to allow the parties to attempt to narrow the issues. We understand that he is also still actively seeking to recruit further potential Claimants, though no further individuals have been named specifically at this stage…”

The Second November Email had attached to it a copy of the 19 October Letter.

Taken together, the First November Emails and the Second November Email have been termed, “the November Emails.” It will be noted that the First November Emails are simply two parts of the same communication. The Second November Email is a separate communication relating to the meeting with Mr Levy and, as Allianz point out in submissions, may require separate consideration.

The Claimants originally gave the name “the Kennedys Documents” to the July Letter, the 19 and 22 October Letters and the Spreadsheet. As noted below, the Claimants at trial did not rely on the July Letter or the Spreadsheet as adding to the argument as to notification. However, the Claimants do rely on the First November emails and the Second November Email as part of the Kennedys Documents, as recorded in the draft Re-Re-Amended Particulars of Claim at [35.6.0] (Footnote: ⁵¹). As I deal with below, the parties agreed that the Claimants should have permission to amend in the terms of this draft and accordingly I treat the Kennedys Documents as defined by the Claimants to include those emails.

Allianz admits in its Re-Re-Amended Defence at [99] that it received the 19 October Letter, though disputes that it was capable of amounting to notification as alleged. It denies receiving the remainder of the Kennedys Documents. The definition of “the Kennedys Documents” at the time that this pleading was filed did not include the First November Emails and the Second November Email, so Allianz’s case must be taken to be the positive case that it did not receive the July Letter or the Spreadsheet.

In AIG Europe Ltd v OC320301 LLP [2017] 1 WLR 1168 at [14], Lord Toulson said of aggregation clauses:

“Aggregation clauses have been a long-standing feature of professional indemnity policies, and there have been many variants. Because such clauses have the capacity in some cases to operate in favour of the insurer (by capping the total sum insured), and in other cases to operate in favour of the insured (by capping the amount deductible per claim), they are not to be approached with a predisposition towards either a broad or a narrow interpretation.”

The Claimants make the following further points:

From an early stage it was identified that the issues as between the Claimants on the one hand and Allianz and the ARP Defendants on the other fell into two broad areas:

By order of 20 January 2022, the Court gave directions with a view to trying the Coverage Claim first. A set of 15 sample Claimants was identified and the trial of the Coverage Claim was listed in November 2024. Prior to that trial, the claim against the ARP Defendants was compromised, leaving only Allianz continuing to defend the claim.

At trial, oral evidence was given by the Sample Claimants (Footnote: ⁵²), namely Dr Dasappaaiah Ganesh Rao (Footnote: ⁵³), Mr Howard Atkins (Footnote: ⁵⁴), Mr Anthony Burn (Footnote: ⁵⁵), Dr Stuart Hood (Footnote: ⁵⁶), Dr Naveen Vasireddy (Footnote: ⁵⁷), Dr Jonathan Shanks (Footnote: ⁵⁸), Dr Syed Ayaz Lufti Sulaiman (Footnote: ⁵⁹), Dr Anthony Coyne (Footnote: ⁶⁰), Mr Roger Stephenson (Footnote: ⁶¹), Mr Matt Ravenscroft (Footnote: ⁶²), Mr John Dickinson (Footnote: ⁶³), Dr Daniel Glass (Footnote: ⁶⁴), Professor John Skinner (Footnote: ⁶⁵), Mr Yega Kalairajah (Footnote: ⁶⁶) and Professor Anoop Chauhan (Footnote: ⁶⁷).

Allianz relied on the written statements of Ms Claire Bushen, Mr Niall Innes and Ms Arran Roberts. The contents of those statements were not challenged and the authors did not give oral evidence.

Both experts, Mr Matthew Wentworth-May (Footnote: ⁶⁸) for the Claimants and Mr David Francis (Footnote: ⁶⁹) for Allianz were called to give oral evidence and were subject to cross examination. Both experts dealt with issues of tax law within their reports. It was agreed by the parties that, although issues of law are of course a matter for the Judge not the experts, such evidence was liable to be of assistance in so far as it dealt with the use of certain words in the tax context, with particular relevance to how that use might apply in light of the way that the various investment schemes operated. Neither party therefore took issue with the experts expressing opinion that in part might be considered to be matters of law and equally I did not interrupt to prevent this though I am acutely aware that on all matters of law, I am the judge applying the usual rules of legal interpretation rather than favouring the evidence of one expert or the other.

In so far as the lay witness evidence is concerned, it is not necessary to deal with it in similar detail at this stage. The evidence of the Sample Claimants, in so far as relevant to issues relating to the effect of the Tax Mitigation Endorsement and the Related Claims Provisions is dealt with in the later sections of this judgment dealing with those issues. The evidence of Allianz’s lay witnesses (which was not the subject of dispute) is referred to as appropriate when dealing with notification issues.

As for the expert evidence, I deal with that in some greater detail below, summarising the opinions of each of the experts before returning to deal with the implication of that evidence in respect of the relevant issues set out below.

Subsequent to the examination of witnesses, the parties filed the Statement of Issues referred to above as well as detailed written closing submissions. They each made oral submissions.

The structure of this judgment is to follow the order and numbering of issues identified in the Statement of Issues. In large part, the issues turn on the true interpretation of the statements of case and the documents that are relied on in respect of notification. The evidence of individual witnesses is of relevance only to part of the case, the application of the t Tax Mitigation Endorsement, albeit this is clearly a matter of importance both to the Sample Claimants and to the case more generally. I deal with that evidence when dealing with the effect of the Tax Mitigation Endorsement.

In the original List of Issues prepared by the parties at A/1/11f, the parties identified the following issues for the trial of the Coverage Claim (Footnote: ⁷⁰).

“CLAIM AGAINST ALLIANZ

Entity Indemnified

Issue 1. Do the Liability Claims or any of them arise from professional services provided by an entity other than White & Co and consequently fall outside the scope of the Allianz Policy?

The Akbar Letters

Awareness

Issue 2. What were the facts of which White & Co was aware by virtue of the March Letter and/or the 9 April Letter and Witness Statement?

Issue 3. Were those matters such as to lead a reasonable person in White & Co’s position to consider that a claim might be made by claimants who were not listed in the Akbar Letters in relation to:

(1)

Investments in the companies listed in the Akbar Letters;

(2)

EIS, SEIS and/or FRB Investments not listed in the Akbar Letters by reason of those investments being:

(a)

The types of investment expressly mentioned in the Akbar Letters, or

(b)

As the Claimants must prove, “similar investments” to the investments listed in the Akbar Letters;

(3)

Bond and/or DJI Investments by reason of:

(a)

Advice alleged in the Akbar Letters;

(b)

Being ‘similar advice’, as the Claimants must prove, to advice given in relation to these types of investment.

Issue 4. As to the 24 April Letter:

(1)

In what capacity did Mills & Reeve receive the 24 April Letter;

(2)

Is White & Co to be taken as having been aware of its contents by virtue of Mills & Reeve having received it.

Notification

Issue 5. On a true construction of (a) the 5 April 2017 Email (sent by MFL to Allianz) and its attachments and (b) the MFL 10 April 2017 Email and its attachments, were these emails a notification of circumstances which might give rise to a claim?

Issue 6. If so, what was the scope of the matters notified to Allianz?

Issue 7. Did receipt by Mills & Reeve of the 24 April Letter comprise a notification to Allianz of matters contained in the 24 April Letter?

Block Notification

Alleged awareness

Issue 8. As a consequence of the Block Notification was White & Co aware that advice it had provided clients in respect of EIS and/or SEIS and/or FRB Investments and/or Bond Investments and/or DJI Investments might have been negligent?

Issue 9. If so, what was the nature of the advice of which White & Co was aware?

Issue 10. Were the matters set out in the Block Notification such as to lead a reasonable person in White & Co’s position to consider that a claim might be made by:

(1)

Persons listed in the Block Notification in relation to:

(a)

Investments identified in the Block Notification,

(b)

Investments not identified in the Block Notification by reason of, as the Claimants must prove, those investments being:

(i)

Similar to the investments identified in the Block Notification, or

(ii)

The subject of similar advice to the investments identified in the Block Notification?

(2)

Persons not listed in the Block Notification on the same bases as set out in (1) above?

Issue 11. If so, what was the nature of the advice of which a reasonable person in White & Co’s position would have been aware as a consequence of the Block Notification?

Notification

Issue 12. On a true construction were (a) MFL’s email to Allianz on 6 June 2017 at 9:56 and the attachments to that email and (b) MFL’s email to Allianz of 29 June 2017 together with its attachments (i.e., the 29 June Email and the 23 June 2017 Email) a notification of circumstances which might give rise to a claim against White & Co?

Issue 13. What was the scope of any matters thereby notified to Allianz?

Kennedys Documents

Issue 14. Was the Spreadsheet provided and/or shown to Kennedys on 21 November 2017?

Issue 15. Was White & Co aware of the July Letter, the 19 October Letter and the Spreadsheet during the Allianz Policy Period?

Issue 16. In what capacity did Kennedys receive the July Letter, the 19 October Letter and (if it was provided) the Spreadsheet and is White & Co to be taken as having been aware of them by virtue of Kennedys having received them?

Issue 17. Were the contents of the July Letter and/or the 19 October Letter and/or the Spreadsheet such as to lead a reasonable person to consider that a claim might be made:

(1)

By individuals listed in the Kennedys Documents;

(2)

By individuals not listed in the Kennedys Documents;

(3)

In relation to investments listed in the Kennedys Documents;

(4)

In relation to Investments not listed in the Kennedys Documents by reason of, as the Claimants must prove, those investments being:

(a)

Similar to investments identified in the Kennedys Documents, or

(b)

The subject of similar advice to the investments identified in the Kennedys Documents?

Alleged notification

Issue 18. Other than the October Letter (which Allianz admits it received from Kennedys), were the Kennedys Documents sent to Allianz?

Issue 19. In what capacity did Kennedys receive the July Letter and (if it was provided) the Spreadsheet and is Allianz to be taken as having received those document by virtue of Kennedys’ receipt of them (if established)?

Issue 20. Did Kennedys sending the 19 October Letter to Allianz comprise a notification of circumstances within the meaning of the Allianz Policy?

Issue 21. On a true construction of the Kennedys Documents, did they comprise a notification of circumstances which might give rise to a claim against White & Co?

Alleged cumulative awareness and notification

Issue 22. Can a valid notification be given as a consequence of and/or by inference from a collection of communications even if the communications taken individually would not themselves comprise a notification?

Issue 23. If so, then taking the Akbar Letters, the Block Notification and the Kennedys Documents together:

(1)

What awareness did White & Co have as a consequence of those communications: alternatively, what awareness would a reasonable person in White & Co’s position have as a consequence of those communications?

(2)

Did those communications comprise a notification of circumstances which might give rise to a claim against White & Co?

(3)

If so, what was the scope of the matters notified to Allianz?

(4)

Do the claims in this action arise out of that notification?

Causal connection

Issue 24. Which, if any, of the claims made by the Claimants in these proceedings arise from matters notified to Allianz (a) by virtue of the 5 April 2017 Email and the MFL 10 April 2017 Emails; (b) by the Block Notification; (c) by the provision of the Kennedys Documents to Kennedys and/or Allianz (if established); or (d) by virtue of (a) to (c) collectively?

Ober

Issue 25. What is the proper construction of the Ober Exclusion?

Issue 26. Can the Ober Exclusion take effect in circumstances where it is not included in the 2016 Minimum Terms?

Issue 27. Where a Claimant received advice and/or information from both White & Co and Ober or alternatively, advice or information from Ober which communicated advice or information from White & Co, or advice from MKP, do claims arising from the said advice fall within the scope of the Ober Exclusion?

Allocation

Issue 28. Can the Allocation clause take effect in circumstances where it is not included in the 2016 Minimum Terms?

Issue 29. Where a Claimant received advice and/or information from both White & Co and another entity what allocation should be made between Allianz and that other entity?

Tax Endorsement

Issue 30. What is the proper construction of the Tax Mitigation Endorsement?

Issue 31. Does the Tax Mitigation Endorsement apply to all or some of the claims the subject of these proceedings?

Related Claims

Issue 32. Does the Related Claims provision operate:

` (a) to aggregate all the claims the subject of these proceedings into a single limit of indemnity; or

(b)

if it is held that there is more than one Related Claim, to subject each Related Claim to a single limit of indemnity; or

(c)

at all?

Retention

Issue 33. Can Allianz rely on the Retention provision in the Allianz Policy or is it inconsistent with paragraph C13 of the 2016 Minimum Terms?

34.

How should the Retention be applied given the Court’s findings in relation to Related Claims and/or the Tax Mitigation Endorsement.”

Given the compromise of the Claimants’ claims against the ARP Defendants, issues 34 to 43 in the list of issues did not arise for determination.

By the time of closing submissions at trial, several issues had either fallen away or were contended to be better dealt with in the Liability Trial (an argument with which I agreed). The position on these issues is summarised in the Schedule of Issues dated 19 November 2024 at A/1.1/1:

“Issue 1: Do the Liability Claims or any of them arise from professional services provided by an entity other than White & Co and consequently fall outside the scope of the Allianz Policy?

It is agreed that this Issue falls for determination as part of the Liability Trial.

Issue 3(3), 8: Bond/DJI Investments

It was conceded by the Claimants that claims relating to these types of investments do not arise from notified circumstances and so no longer form any part of the claims.

Issues 4 and 7: 24 April Letter

It was conceded by the Claimants that they no longer rely on the 24 April Letter on the basis that it does not add materially to the Akbar Letters. However, the Claimants continue to rely on it as a document said to contribute to White & Co’s awareness.

Issues 15, 16, 19: July Letter

So far as these issues refer to the July Letter, the Claimants conceded that it does not materially add to awareness or notification and no determinations are sought in respect of it.

Issues 14, 15, 16, 17, 19: the Spreadsheet

So far as these issues refer to the Spreadsheet, the Claimants have accepted that the Spreadsheet which Mr Levy says was referred to at his meeting with Kennedys on 21 November 2017 is not capable of being a notification to Allianz. It therefore falls away as a point for determination on these issues, and Issues 14, 15 and 19 fall away entirely.

Issues 22 and 23: Cumulative awareness and notification

The Claimants conceded that the cumulative awareness set out at paragraphs 35.7.0 to 35.7.2 of the Re-Amended Particulars of Claim do not constitute a separate notification of circumstances in their own right. Accordingly Issues 22 and 23 fall away. However, the Claimants’ case is that the factual matrix for the proper construction of each notification ought to include the contents of any previous notifications.

Issue 27: Where a Claimant received advice and/or information from both White & Co and Ober or alternatively, advice or information from Ober which communicated advice or information from White & Co, or advice from MKP, do claims arising from the said advice fall within the scope of the Ober Exclusion?

The parties agree that Issue 27, like Issue 1, is better determined as part of the Liability Trial.

Issue 28: Is the Allocation Clause contrary to the Minimum Approved Wording in the Allianz Policy?

The parties agree that, if Issue 28 arises, it is better determined as part of the Liability Trial.

Issue 29: Where a Claimant received advice and/or information from both White & Co and another entity what allocation should be made between Allianz and that other entity?

The parties agree that Issue 29, like Issues 1 and 27, is better determined as part of the Liability Trial.

What constitutes a Claim?

The parties agree that this issue (insofar as it arises) is better determined as part of the Liability Trial.

Issues 33 and 34: Can Allianz rely on the Retention provision in the Allianz Policy or is it inconsistent with paragraph C13 of the 2016 Minimum Terms? How should the Retention be applied given the Court’s findings in relation to Related Claims and/or the Tax Mitigation Endorsement?

The parties agree that Allianz can in principle rely on the Retention clause in the Allianz Policy, and that a retention of £10,000 per Claim (as defined) is applicable, up to a maximum of £60,000.”

The remaining issues for determination were identified by the parties in the Schedule of Issues (Footnote: ⁷¹) dated 19 November 2024 and the core of each party’s case was conveniently summarised. I adopt this list of issues in my judgment below to determine the outstanding issues in the Coverage Claim. It is doubtless the case that the list is the product of negotiation between the parties and some degree of compromise but overall it encompasses all of the issues that need to be determined save for two difficulties about the drafting of SOI[17] that I deal with below.

I should note however the discussion that took place at the beginning of closing submissions where the parties considered issues which are closely related to the issues that have been defined for the Coverage Trial but which it was agreed should not be dealt with at this stage. These include:

In terms of SOI[17], there is an apparent inconsistency between how this is drafted and how it is dealt with by the Claimants. The drafted language is “Did Kennedys sending the October Letter to Allianz comprise a notification of circumstances within the meaning of the Allianz Policy?” This may be in fact be intended to be a reference to the “October Letters” that is to say both the 19 October and the 22 October letters or simply to the 19 October Letter. When dealing with this issue in written closing submission, the Claimants refer to whether sending the 19 October Letter amounted to notification but also whether receipt of the 22 October Letter by Kennedys was good notification. These two issues are rather different in nature and the obvious way to distinguish between them is to subdivide SOI[17] between the two letters.

A further issue arises as to SOI[17]. As I see it, the distinction between SOI[17] and SOI[18] (apart from the fact that the former deals only with the October Letters and the latter deals with all of the Kennedys Documents) is the question as to whether, having regard to the role of Kennedys, receipt or sending documents by it is capable of amounting to notification, whereas the issue in SOI[18] is whether some or all of the Kennedys Documents in fact amounted to notification. To reflect this difference I have slightly reworded the two parts of SOI[17] as follows:

With this slight redrafting and minor changes for clarity and accuracy, the Schedule of Issues of 19 November 2024 and the summary of each party’s case is thus:

It will be noted that, in light of Allianz’s position on the Ober Exclusion, Issues 25 and 26 do not fall for determination.

The experts both have impressive experience in dealing with issues of tax law, with particular reference to issues relevant to this case.

As is noted below, the experts agreed that the key issue is whether transactions are artificial and that this may be judged by applying the summary of the law given by Lord Walker at [22] in the judgment of the Privy Council in Commissioner of Taxpayer Audit and Assessment v Cigarette Company of Jamaica [2012] 1 WLR 1794:

“…in this context a transaction is "artificial" if it has, as compared with normal transactions of an ostensibly similar type, features that are abnormal and appear to be part of a plan. They are the sort of features of which a well-informed bystander might say, "This simply would not happen in the real world." Recognising a transaction as artificial in this sense is an evaluative exercise calling for legal experience and judgment. It is certainly not an ordinary question of primary fact…”

Mr Wentworth-May’s approach in his first report was to consider where, as a matter of general tax law, any particular investment could be treated as a Tax Avoidance Investment, defined in his report as “loans, investments or trusts which were pre-planned artificial transactions designed to achieve a specific tax outcome including tax loss, tax allowances or tax exemption.” His focus was on the investment itself not the investment vehicle.

Mr Francis looked at the individual investment vehicles and asked a series of questions to consider whether the investment vehicles were artificial:

Applying those principles, Mr Francis considered the EIS investments that are in play in this case and drew together his conclusions in a table. His conclusions in that table were revised in the light of certain additional information that became known after his main report was prepared, as considered in his addendum report of 15 November 2024.

Mr Wentworth-May then commented on Mr Francis’ assessment of many (though not all (Footnote: ⁷³)) of the individual investment vehicles within his supplemental report. In doing so, he raised various points of disagreement with Mr Francis as to the criteria set out in the preceding paragraph.

Drawing together the opinions of the two experts on the individual investment vehicles,

The experts agreed in their joint meeting that there was a scale of artificiality which was a starting point for considering the circumstances of individual investments or investment vehicles. It was common ground that Super EIS and FRB investments were artificial, at least in so far as the relevant loan to achieve the Super EIS scheme or (where relevant) FRB investment was made. If the loan was not made and/or the investment was funded from the individual investor’s own personal funds, Mr Wentworth-May considered that the investment would not be said to be necessarily artificial.

On the scale of artificiality,

In the joint statement, the experts considered the so-called Ramsay principle (Footnote: ⁷⁷) to the effect that proper approach to the taxation of a transaction involving “pre-ordained artificial steps which served no commercial purpose other than to avoid tax, the proper approach was to tax the effect of the transactions as a whole, such that the artificially created capital losses should be disregarded.”

The Claimants’ claim is that the investments in respect of which it brings an action or set out in the schedule to the RAPOC. They are defined in paragraph 4 of that document. There is no specific reference to Seed EIS investments, but several of the investments are in fact of that category and the court should focus on the actual nature of the investment, not its label. In particular:

As Mr Chapman KC pointed out in oral closing submissions, there is no necessary inconsistency between a particular investment scheme qualifying as Seed EIS at one stage and an EIS later on given that two have differing but overlapping criteria. The claim is about the investments that are named within the Statements of Case – whether they are correctly identified as Seed EIS or EIS is merely a labelling issue.

In these circumstances, the failure specifically to plead the correct nature of the particular investment is of no import. So long as the actual investment as to which the allegations relate is identified, its actual labelling as EIS or Seed EIS is a not a material issue that should prevent the investment being considered as part of the claim.

Allianz draws attention to the failure to plead any reference to Seed EIS Investments within the RAPOC itself and only ambiguous reference (“SEIS”) within the Schedule. It rejects the suggestion that, if the Claimants could prove notification of a particular category of investment, the relevant investment falls within the ambit of the claim. As Ms Dixon KC put it in closing submissions, “Something does not become part of the underlying claims because it is part of the case on notification… it is very important to keep those two things separate…”

Of the various Seed EIS investments referred to in the Schedule at A/12 in the bundle, Allianz contends that some were wrongly labelled as EIS schemes where they were in fact Seed EIS schemes - those are Anonymous Endeavour, Cuchifritos, Go Bog, Steffi Productions and Uprising Features. But there are others where the labelling is wrong not because the scheme is inaccurately named but because it is not sufficiently labelled because these are schemes that at one stage were subject to the Seed EIS regime and a later stage were subject to the EIS regime. These are AC Capital, Blonde to Black, Fairtytale Films, Hekamiah Holdings, Nowpresent, Panic House Films and PlusMe (Footnote: ⁷⁹).

As Ms Dixon KC put it “My point is the investment companies are named, they are not incorrectly labelled, they are wrongly labelled…You cannot just cut and paste EIS out and put SEIS (Footnote: ⁸⁰)in because for some of them they also have share elements or they have bond elements, film right elements or they are both seed and EIS. It’s not just mislabelling.” As she pointed out in oral submissions the Claimants had indicated that they were not proposing to seek permission to amend in this respect and accordingly they had to live with their pleaded case which simply did not refer to Seed EIS Investments.

In respect both of this and the second issue, whether Ober Investments are included in the pleaded case, Allianz accepts that it cannot say that it has suffered any prejudice through the failure to plead the claims properly, since the error had come to light before the trial and it has been possible to conduct the case on the basis that the Seed EIS Investments and the Ober Investments may be included within its ambit without this changing the arguments that need to be developed.

I have sympathy with Allianz for the failure to plead the Seed EIS Investments accurately. The fact that this is not a description of some investments but goes further to amount to a failure accurately to particularise the case by distinguishing between investments that were at times subject to the Seed EIS regime and at other time the EIS regime is potentially confusing. But the failure of the Defendant to show any actual prejudice on this issue causes me to hesitate before ruling that it is not open to the Claimants to advance the entirety of their case because of what ultimately is a simple pleading failure.

The point can be put another way: would there be any difference to how the case has developed and been presented, had the Claimants pleaded the case as Allianz say they were obliged to? The answer is no, save possibly as to the incurring of avoidable costs that flow from the issue not being adequately or accurately particularised. The parties know where they stand. Admittedly the failure to plead the case accurately may have caused some confusion on route to fully understanding the claim and if, ultimately and but for the ruling on this issue and Issue 2, the Claimants recover costs in circumstances where either the costs that they recover or the irrecoverable costs of Allianz are shown to be greater than they would have been but for the failure to plead the investments accurately, Allianz would have a powerful argument that the costs order should be adjusted to reflect the incurring of avoidable costs. The calculation of those costs may not be entirely straightforward, but in principle a rough and ready approach should be capable of being adopted to avoid any costs prejudice to Allianz.

I do not consider that this principle is to be applied differently where the error arises not through simply mislabelling something but through a failure to recognise the different scheme to which an investment is subject at different times such that the label given to an investment may be wrong at one point in time but correct later on. Such a mistake may be more likely to be the source of confusion than a mislabelling that has remained consistently wrong but where, as here, it cannot sensibly be said that any prejudice is caused by this category of mistake, the same principle of allowing a party to have the entirety of its case decided so long as this can be achieved fairly has equal force. This is consistent with the overriding objective in so far as it involves the court seeking to do justice between the parties whilst being aware of the potential consequences of procedural failings.

For these reasons, I accept that, so long as investments are pleaded within the Schedule to the RAPOC then, even if pleaded inaccurately as to type, they are within the ambit of the claim, regardless of whether the misdescription is one that has been consistently made in respect of the investment or is one that is correct at some points but wrong at others. Accordingly, I answer Issue 1 in the affirmative.

As regards Ober Private Clients Ltd, this was a company that was expressly mentioned in the March Letter (Footnote: ⁸¹), one of the documents that comprises the Akbar Letters. Mr Chapman KC acknowledged in closing submissions that the reference was to “Ober” not to “Ober Private Clients Ltd” but he contends that there is no other company to which this could be a reference.

Again, the Claimants accept that Ober is not expressly mentioned in the RAPOC but in so far as any investment in fact falls within that category and the investment itself is listed, the Claimants say that the court should find that there is adequate notification.

Again Allianz points to the absence of any reference to Ober Investments in the RAPOC. In this case however the difference between Ober investments and other investments is of a different nature than that which is considered in the EIS/Seed EIS case. The latter involves investments subject to a specific tax regime. On the other hand, Ober investments are defined by reference to the company in which the investment is made.

These investments are listed in the Schedule to RAPOC but are not referred to in the RAPOC itself. The notification of these claims is again said to come in the March letter, albeit that, as Ms Dixon KC noted in closing submissions, the so-called investments listed in that letter is something of a catch-all, since it includes for example Amarone, a company that was lending money to investors, but which has not itself been the subject of investment.

As with Seed EIS Investments, the failure within the body of RAPOC to plead to a case based on this kind of investment could well have led to a confusing picture. In the event, it has not done so. For the same reasons, I conclude that the failure properly to particularise the claim in this regard should not be a bar to the Claimants including such investments within the scope of this claim. The same caution as to any potential costs consequences applies.

I have noted above that the Akbar letters comprise the March Letter and 9 April Letter, together with the Levy Witness Statement that was included with the latter. The Claimants contend that the Akbar Letters made White & Co aware of matters in respect of all three of the categories of awareness noted at [40] above, namely Advice Awareness, Loss Notification and Risk of Claim Notification.

Advice Notification was:

Loss Notification was to the effect that:

Risk of Claim Notification was as follows:

Broadly speaking, Allianz accepts much of the Claimants’ stated case on the contents of the Akbar letters and their meaning. In its written submissions, it accepts that the communications would create awareness that the Initial Akbar Claimants were claiming that White & Co had given them negligent advice in respect of their investments in named company and that as a result they would be making claims of damages against White & Co. Allianz’s issue is with the suggestion that “the potential claims went beyond merely the Akbar Claimants.” The documents do not refer to any investors other than the Akbar Claimants nor do they refer to any other investment vehicles than the named companies, all of which were companies into which the Akbar Claimants were said to have invested.

The Akbar Letters are careful to identify the investors and companies to which they relate and do not suggest that others, on whose behalf claims might be made, had lost out as well or that other investment vehicles were being contemplated as the basis of claims. Both the March Letter and the Levy Witness Statement set out a table of specific investments made by each of the Initial Akbar Claimants into the named companies. White & Co could have done no more than guessed whether it was being suggested that other investors and/or other vehicles might have been the subject of the same or similar allegations.

The matters of which White & Co can be said to be aware as a result of the Akbar letters is largely apparent from the face of those letters, which is to say that the named (but no other) investors might bring claims in respect of the stated investments (but no others). The letters do not make the reader aware of facts beyond that which is stated in them. It is possible that such facts might be implicit, but there is nothing internal in the wording of the letter that would make the reader consider that other claims might arise. To the contrary, the understandable detail into which the letter goes implies that these are the only potential claims known about to the author of the letter and therefore the only claims that the author is raising with White & Co.

I accept that any reader of the letter who knew that White & Co had advised these and other clients in respect of other investments might suspect that, if these were good claims, there would potentially other good claims to be made. That suspicion would arise from awareness of facts outside of the contents of the letter (specifically the details of the practice of White & Co).

It is necessary to bear in mind that notification clauses of the kind with which we are dealing here act potentially to the benefit of the insured (and therefore potentially to the third party who has a claim under the 2010 Act), since it enables the insured to obtain indemnity in respect of potential claims where otherwise it might have to declare the existence of such claims and risk insurance cover being declined or only offered on special terms before the claim itself has been notified. But if, as Allianz contends, the price of such extended cover is the obligation to notify potential claims at the “awareness” stage, an overly broad interpretation of awareness may cause irremediable prejudice to the insured.

It follows that the contents of the letter should not be interpreted broadly, drawing in facts which the informed reader might know from other sources. Rather, it should be looked at on the face of the words used. Those words simply make White & Co aware that the Initial Akbar Claimants intend to make a claim against White & Co in respect of negligent advice in relation to investments in specific named companies.

Looked at in terms of the Claimants’ breakdown of the issues here, I accept that the Akbar Letters gave the advice notification and loss notification of which the Claimants speak. However, it only gave the first element of the risk of claims notification, that is to say that “The Akbar Claimants were intimating claims against White & Co in negligence and in breach of duty in respect of its advice concerning investment and in its tax advice.” It did not make White & Co aware of the potential claims of others, nor did it make White & Co aware that “The potential claims intimated against White & Co in respect of EIS Investments were the same or similar claims or causes of action pursued by Mr and Mrs Baxter against White & Co from 2014 under claim number B40MA145 which White & Co had settled in 2017, which related to an investment in Crown Talent & Media Group Limited, itself one of the Akbar Letters Companies.” For the sake of completeness, I should say that this does not mean that White & Co may not have been aware of these latter two matters on or after reading the Akbar Letters; simply that it was not the Akbar letters that made them aware of this.

The Claimants contend that a reasonable person in the position of White & Co would know the nature of its practice, including that it had advised other investors and that the advice covered other companies than those named. On receipt of the Akbar Letters, the reasonable person would consider that any client who invested in the companies named in the Akbar Letters might make the same allegations as the Akbar Claimants because any client investing in the same company or companies might face the same challenge from HMRC and suffer the same investment outcome.

It is reasonable to infer that White & Co knew (and that the reasonable person in White & Co’s position would have known) that White & Co’s approach to the tax treatment and presentation of EIS Investments, Super EIS Investments and FRB Investments was substantially similar. Therefore a reasonable person would consider that any client who invested in EIS Investments, Super EIS Investments or FRB Investments may make the same allegations as the Akbar Claimants.

Allianz contends that a reasonable recipient of the Akbar Letters in White & Co’s position would not have formed the view that, just because the Initial Akbar Claimants were making claims against White & Co, there was a risk of claims being made by (i) other investors, or (ii) in respect of other investments. That is because the allegations were all referable to advice given by White & Co to the Initial Akbar Claimants, But no other investors were named and no other investment companies were identified. There was quite simply no “substratum of underlying external fact” which might give rise to the circumstances that might be notified.

Ms Dixon KC cautioned that there was a particular danger of seeking to interpret documents as giving notification to an insurer where the insurer could not reasonably have anticipated or understood that to be the purpose of the documents. She gave as an example of this the 9 April letter annexing a witness statement that exhibited Particulars of Claim and other documents and said, “I have some horror about what that (Footnote: ⁸³)would mean if insurers had to scrutinise exbibits to documents that they were provided with to see if there were any possibility that they contained a scintilla of something beyond [what] they had been told was the notification.”

I have indicated in respect of SOI[3] that the facts communicated by the Akbar letters are to be judged from their internal contents, not by looking at the wider picture. But if “awareness”, in the sense of being furnished with information which the insured reasonably thinks might give rise to a claim, is a factual matter to be judged on the basis of their state of mind, I see no reason why such awareness might arise not only from facts communicated to the insured but also from the insured’s own knowledge of relevant matters. I referred above to the hypothetical personal injury barrister who habitually misadvises on the applicable limitation period. Assuming that the barrister knows that they have given this advice on many occasions, once they are made aware that the advice is or may be wrong, they equally become aware that other claims might flow from the advice. Without a detailed audit, the barrister might not know how many claims, nor may they be able to remember the particular litigants whom they have advised. But I do not see they would lack the necessary awareness of the potential of a claim.

One can test this issue by looking at whether this hypothetical barrister, who at the expiry of one professional indemnity insurance policy is seeking a replacement policy. Would they be under an obligation to declare the fact that it had come to their attention that they had been habitually misadvising clients because they had misunderstood or misapplied the relevant limitation period? Insofar as their awareness was concerned, it is at least arguable that they are aware of the potential for a claim and, dependent upon the particular questions raised of them, may have to declare those matters. The corollary is that a condition of a policy or a minimum term, such as that with which the court is dealing, is liable to be interpreted in a manner generous to the barrister who might otherwise find themselves uninsured and uninsurable in respect of a potential professional liability.

Consideration of the state of mind of White & Co therefore involves consideration of their practices, including what advice they had given and to whom. It is the Claimants’ case that they advised many other investors in respect of many other investments and this advice was similarly flawed, to the extent that the Claimants have felt able to seek to amend their claim to plead fraud. For the moment, there is no evidence from which the court could reach such a conclusion even if the pleading had been admitted (which it as not), but there is evidence to support the contention that there are many other investors who have been advised by White & Co and whose affairs have been investigated by HMRC, often leading to an unsatisfactory conclusion for the investor because of the failure of the investments to achieve the tax benefits that had been anticipated. There is further evidence that the investments themselves were not making good returns for the investors.

Looked at through the lens of Toulson LJ in Kidsons at [139] – [141], cited above, this is at least a case where there could well be a finding of the real possibility, if not the real risk of a claim. The reference by Rix LJ to a “substratum of underlying external fact” (my emphasis) might be thought to require the circumstances to lie outside of matters known to the insured but not to others, for example the knowledge of one’s own deficient practice. But I see nothing in the authorities to support the proposition that the knowledge that is relevant to the risk of a claim must arise independently of the state of mind of the insured itself. Such a requirement would be difficult to adjudicate on, since it might well require the court to examine whether factors that were undoubtedly known to the insured were sufficiently known by others to make them “external” in this sense.

It might be said that, if the insured’s own knowledge of circumstances is sufficient to give rise to the existence of matters that could be subject to notification, this condemns the court to having to examine the internal thinking of the insured in a way that will create uncertainty about whether the obligation to notify has arisen. Undoubtedly it would be undesirable to encourage ambiguity in what amount to relevant circumstances for notification purposes, though the existence of such uncertainty is already inherent in the spectrum of cases contemplated by Toulson LJ in Kidsons.

In reality though the uncertainty in permitting (or indeed requiring) the knowledge or belief of the insured themselves to form part of relevant circumstances in terms of their awareness is likely to be unproblematic:

It follows that the fact that relevant facts or suspicion lie within the mind of the insured is no bar to a finding that the insured had sufficient awareness that a claim might be made to trigger the right and/or obligation to declare that circumstance to the insurer.

On receipt of the Akbar Letters, White & Co must have been aware of the pattern of advice that they had given, and must have realised that that which was being alleged might apply to many other investors and many other companies. Put simply, these letters would have been liable to cause consternation in the mind of anyone who knew the scope of the work that White & Co had been undertaking. (One might similarly suspect that the hypothetical personal injury barrister, who is suddenly told that the limitation advice given routinely over several years is in fact wrong, would feel horrified on realising how many clients may have been misadvised.)

Whether on the facts of this case it can be said that the Akbar letters made White & Co aware of matters that might be relevant to potential claims either on behalf of other clients or in respect of other investments is a fact sensitive issue. The Claimants’ case is that White & Co were well aware that that they were habitually misadvising clients. Indeed, at its (unpleaded) highest, the Claimants contend that this was a fraud on clients. But whether in fact receipt of the Akbar Letters can be said to have made White & Co aware of specific facts beyond those which are stated in the letters will depend upon a consideration of the practice of White & Co in terms of advising on investments and the possibility that the contents of those letters. It might have been the case that, even on receiving the Akbar Letters, White & Co considered that no claims could properly be bought either by the Initial Akbar Claimants or indeed by anybody else whom they had advised in similar terms. Whether that is in fact a tenable argument is one that may fall to be determined during the Liability Trial. Certainly, on the evidence before me, a reasonable person receiving the kind of notification set out in the Akbar Letters would probably have concluded that similar considerations might apply to investors such as the Sample Claimants and, having heard from the Sample Claimants, there is good prima facie evidence that they and other investors in a similar position would be liable to contemplate litigation against White & Co.

It follows that, given the relevant background knowledge of the advice that White & Co had given, a reasonable person in the position of White & Co would have concluded that claims might be made by persons other than those listed in the Akbar Letters in respect both of the investments referred to in those documents and to other similar investments, such as EIS, Seed EIS and FRB schemes.

The Claimants contend that the emails of 5 April 2017 and 10 April 2017 from MFL to Allianz amounted to the notification of circumstances which might give rise to a claim since:

Within their written submissions on SOI[6], the Claimants deal with the question of whether the Akbar Letters amount to Hornet’s Nest Notification. In my judgment, this issue needs to be considered as part of SOI[5], since it involves consideration in the first place of whether the communications amounted to the notification of circumstances rather than what was being notified, albeit that if the court accepts that it does amount to the notification of circumstances, this raises a further question of what the scope of that notification was, to which Hornet’s Nest Notification may also be relevant.

The Claimants make the following points as to Hornet’s Nest Notification:

On the other hand, the Claimants deny that these were notification of claims under the policy.

Allianz contends that the 5 April 2017 email from MFL to it, including the March Letter from Mr Levy on behalf of the Initial Akbar Claimants, was notification of a Claim (not a circumstance), namely the demand by the Initial Akbar Claimants in respect of advice they had received by White & Co in relation to the specified investments. The further email from MFL on 10 April 2017 sought to bring the Levy Witness Statement and further information from White & Co in relation to that Claim to the attention of Allianz. It was not, on Allianz’s case, the notification of either a Claim or a circumstance.

I consider first the 5 April 2017 Email. That included the March Letter from Mr Levy that stated amongst other things that:

Contrary to the position taken by the Claimants, this was the clearest notification of a claim, in the sense of a written demand for compensation in respect of wrongful acts of White and Co. It is indeed correct that the allegations are not referred to as “Claims” and that Mr Levy sought the disclosure of documentation. But the absence of that documentation did not prevent him asserting what is obviously a “claim” both within the meaning of that phrase in the Allianz policy wording and indeed within the ordinary meaning of that word (which is similar to the Allianz wording).

There is nothing in principle to prevent the same communication being both notification of one or more claims and a notification of circumstances. But, as I have identified above, the language of the letter does not imply that there were other claims to be brought, whether by other claimants or in respect of other investments.

If the communication with Allianz had been accompanied by assertions (from White & Co or someone else with the relevant knowledge) to the effect that there would or might be other claimants and/or other investments in the same circumstances as those named within the March Letter, it may be that the email could have been interpreted as the notification of broader circumstances but the material before the court simply does not support that conclusion. Without the knowledge of other potential cases, I do not see that this communication to Allianz could be interpreted as anything other than it appears on its face, namely a notification of specific claims.

As to the email of 10 April 2017, the enclosures from Mr Levy (the draft statement and his letter of 9 April 2017) provide further material in support of the allegations contained in the March Letter. In particular, details of the various investment companies. That information might have caused White & Co some concern about other investors with the same companies, but there is nothing in the communication with Allianz that would be liable to cause it to think that other claims were in contemplation.

In so far as it is suggested that the Hornet’s Nest Notification principle applies to either or both of these notifications, the difficulty for the Claimants lies in showing that any circumstances have been notified that might be said to be the “notification of a problem, the exact scale and consequences of which are not known” as referred to in Euro Pools at [39(iii)]. The very fact that the document refers to specific incidents without suggesting a wider problem tends against this conclusion. In respect of the particular points advanced by the Claimants:

It follows that I agree with Allianz that the 5 April 2017 Email was notification of a Claim (that of the Initial Akbar Claimants) not the circumstances of a claim or claims, and the 10 April 2017 Email provided further particulars in relation to the Claim of the Initial Akbar Claimants. It did not amount to the notification of circumstances that might give rise to a claim and is not capable of being relied on by the Claimants in this case.

It follows from my finding on SOI[5] that SOI[6] and [7] do not fall for determination since I do not consider that the Akbar Letters communicated anything other than the claims of the Initial Akbar Claimants, these being claims that form no part of the litigation before me. In particular it is neither necessary nor possible to analyse the scope of Hornet’s Nest Notification in circumstances where the Akbar Letters do not amount to a relevant notification at all.

The Claimants start by noting that White & Co was already aware of the matters set out at in [137] to [139] above (relating to Advice Awareness, Loss Awareness and Risk of Claim Awareness) as a result of the Akbar Letters. The Claimants contend that further awareness in each category arose as a result of the Block Notification.

Advice Awareness:

Loss Awareness:

Risk of Claim Awareness:

The Claimants argue that the nature of the advice was:

Allianz assert that there are several problems with the Claimants’ case:

Allianz therefore denies the contention that this material amounted to the provision of any notification beyond that for claims that might be made against MKP.

In respect of the ambit of that notification, Allianz says that it was limited to claims or potential claims against MKP (not White & Co) arising out of premature claims for EIS relief (rather than negligent advice as to entering into such investments) limited to the people and their specific investments named. During closing submissions, Ms Dixon KC drew my attention to the contents for example of the email from Dr Bose at D/36/1. This makes clear reference to the concern that a premature claim for EIS relief had been made but was not more generally a complaint about the advice to enter into the investment. There is nothing in these communications to cause the recipient to think that a claim along the lines of that now being made was envisaged. Indeed, that is how Mr White interpreted the communication as is apparent from his response at D/37. The mere fact that clients were complaining about delay in getting certificates was not some form of complaint about advice to enter into the transaction at all.

This issue is of course concerned with the state of mind of White & Co. By the time of the Block Notification, that firm was aware of several key matters:

Further White & Co of necessity knew the nature of what it had said to clients and therefore it knew whether advice had in fact been given, and, to the extent that it had, the nature of that advice, the range of investors that it had advised and the spread of investments in which it had given advice. The evidence of the Sample Claimants as to the reasons for their investments and in particular the significance of the tax advantages of the EIS schemes was very much in line with that asserted by Dr Bose in his letter. I have no hesitation in concluding from the totality of the evidence that White & Co was aware that, if the tax benefits from entering into EIS schemes were less favourable than it had advised, investors might complain that they had suffered losses as a result of entering into such schemes, just as Dr Bose was doing.

It is of course clear that Ms Abbott was asserting that the only potential liability was that of MKP. That was a statement that appears to have been made on behalf of both MKP and White & Co and I do not accept that it can be disregarded simply because it speaks of the position of the former – the very point being made is that the claims related to MKP, not White & Co, which is as much (if not more) a statement relevant to White & Co’s position vis-a-vis the insurer as it is in respect of MKP’s position.

However, the assertion that the claims only relate to a potential liability of MKP is inconsistent with several features of the evidence:

Taking the contents of the Block Notification with the background knowledge about other associated companies about Advice alleged to have been given by White & Co, I am satisfied that a reasonable person in the position of White & Co would have considered on receipt of the Block Notification that any of the clients whom it had advised about entering into EIS, Seed EIS and/or FRB schemes might complain that they were not obtaining the tax benefits that they had been advised that they could expect to receive.

The Claimants contend that it is self evident from the matters referred to in respect of SOI[8] that the people named in the Block Notification might bring claims against White & Co, that being the very purpose that the Block Notification was made. As to others:

These features were reflected in the fact that the MFL email of 29 June, which refers to the notification as “Blanket Notifications.”

Allianz repeats the point that the evidence from Ms Abbott’s email indicates a belief on the part of White & Co that potential claims that were contemplated related not to White & Co but to MKP. In response to the Claimants’ argument that the email was written by Ms Abbott on behalf of MKP, not on behalf of White & Co and therefore cannot be treated as evidence of White & Co’s state of knowledge, Allianz argues that this is an artificial distinction. Ms Abbott was clearly speaking in the correspondence in her role as director and shareholder of both companies. Further, Allianz lays emphasis on the fact that the Block Notification communications related to the timing of EIS relief, not to whether it was available at all.

I have found that the Akbar Letters amounted to notification of a claim, that is to say the claim of the Initial Akbar Claimants. However, that notification did not extend to claims made by other investors or in respect of other investments referred to above.

In looking at White & Co’s awareness following the Block Notification, it is again appropriate to bear in mind the range of information that it had now received, as summarised in respect of SOI[8] at [175] to [175] above. White & Co knew that others were complaining about the advice that they had received in respect of the tax implications of the EIS and similar schemes. The Baxters had brought a claim (that had settled) and Dr Bose had intimated a claim for losses suffered due to the failure of HMRC to recognise purported EIS investments. The queries that HMRC were now receiving in respect of the people named in the Block Notification were, in the first place, about the timing of claims for EIS relief. However, from Dr Bose’s communication, it is quite clear that he is complaining not just about the timing of EIS relief but rather whether it is available at all and that, in this respect, he has been told that “the rules have been broken.”

It important not to judge White & Co’s state of awareness with the benefit of hindsight. Knowing what has been pleaded and said in court during the hearing of this case, anyone might be forgiven for thinking that the adequacy of White & Co’s advice as to the operation of EIS schemes, in particular the expression of unjustified optimism that such schemes would be approved by HMRC, is the unifying feature of the allegations that are made against them. But applying the test of “reasonable foresight” as to what White & Co can properly be said to have been aware of when the Block Notification was made, the combination of their knowledge of the advice that they had given and the range of investors whom they had advised, together with the queries that HMRC were raising and the concerns expressed by Dr Bose about whether at least some of the schemes proposed by White & Co properly qualified for EIS, I am satisfied that White & Co were aware that claims might be made by:

The Claimants repeat their contentions in respect of SOI[8] and SOI[9], laying emphasis on the range of potential claims and the description of the communication as “Blanket Notifications.” In so far as it is suggested that Ms Abbot’s email of 23 June 2017 might appear to limit the notification to claims against MKP rather than White & Co, the Claimants contend that this email was forwarded as part of a notification which related both to White & Co and MKP, as is apparent for example in the subject line of the email from MFL to Allianz of 29 June 2017.

Allianz again repeats its position in respect of SOI[8] and SOI[9]. The notification that was being given related to a different issue (the timing of EIS relief) and was specified to relate to MKP, not White & Co.

In the first place, consideration is required as to whether the Block Notification was a notification of claim or of circumstances. Giving my finding at [173] above as to the ambit of the notifications, this was plainly a notification of more than individual claims, but rather circumstances that might give rise to claims.

I turn to whether these circumstances might give rise to a claim against White & Co. In considering the previous issue, the awareness or state of mind of a reasonable person in the position of White & Co at the time that the Block Notification was made, I have laid particular emphasis on matters known to White & Co that were not apparent from the fact of the documents that were communicated to Allianz. As I have identified, consideration of White & Co’s state of mind necessarily involves consideration of matters known to it that were not necessarily known or apparent to others.

But when attention turns to how a reasonable insurer in the position of Allianz would interpret the notification that it received, such material must be approached with care. There are many things known to an insured that are never shared with the insurer yet may be relevant to potential claims.

The two emails from MFL to Allianz dated 6 June 2017 (Footnote: ⁸⁴) were expressly stated to be on behalf of White & Co and MKP respectively and, taken alone, might be thought to amount to a notification on behalf of both of those two insured entities. However, the actual text of the emails makes clear that the question of what is being notified requires further consideration not least in light of the 6 June Email from JMW which shows ongoing investigation and which does not distinguish between the position of White & Co and MKP. The further communications sent by MFL to Allianz on 29 June 2017 then expressly limit the notification to MKP.

Allianz was not privy to any of the other material referred to above as supporting the fact that White & Co’s state of mind was to the effect that claims might be brought against it relating to advice in EIS or similar schemes. Specifically:

It would not be right to treat the initial ambiguity about which of MKP and White & Co were said to be the subject of potential claims as providing notice to Allianz of potential claims against White & Co (rather than MKP). The process identified above was one of clarification of what notification was being supplied to the insurer. If an insured is not able to provide such clarification, it risks the adverse consequence for it that an insurer treats it as having notified circumstances (or a claim, as the case may be) that adversely affects the insured’s claims history without it ever having intended to make such notification. If an insurer is not able to rely on such clarification, it risks a finding that it has received notification of claims or circumstances which it has been implicitly told (in the information being by way of clarification) that it does not need to treat as such.

It follows that I do not find the Block Notification to be valid notification to Allianz of circumstances which might give rise to claims against White & Co.

For the sake of completeness, I accept that the Block Notification gave rise to the notification of circumstances which might give rise to claims against MKP, not merely identified claims. I say this because:

The Claimants contend that the Block Notification gave notice of potential claims relating to tax advice and investment advice in respect of the companies named in the various documents in respect of EIS Investments, Seed EIS Investments and Super EIS investments and of similar investors and similar investment companies through Hornet’s Nest Notification of circumstances that might give rise to such claims.

The Claimants contend that Seed EIS and Super EIS Investments are “similar” to EIS Investments, which are the express subject matter of the notification.

As regards other investors and other investment companies, the Claimants’ written closing submissions adopt the argument as to the nature of such notification which is argued in relation to SOI[6] relating to the Akbar Letters above. In light of my findings on SOI[5], it was neither necessary nor appropriate to consider that issue as part of SOI[6], since I did not accept that notification of circumstances had taken place at all through the Akbar Letters. The situation on this issue differs from that in respect of the Akbar Letters because here I do accept that the notification is not simply of claims but is of circumstances, in that the named people are a set who are potentially claimants but it cannot yet be ascertained which of them are.

The Claimants therefore advance their case that there was here notification not only of the specific circumstances of the potential claimants and investments listed in the spreadsheet at D/35. They contend that, whilst the notification specifically identifies EIS Investments (Footnote: ⁸⁵), the tax similarities between EIS schemes, Super EIS schemes and Seed EIS schemes identified above are sufficiently close to mean that anyone aware of the possibility of claims relating to the first would realise that any advice that was relevant to that investment would be liable to have been informed by similar if not the same thinking as investment in respect of the other two schemes.

Allianz does not dispute that the Block Notification was of circumstances not merely claims, but contends that those circumstances were limited to the pool of named investors and the named companies. There was no wider notification than that and no question of Hornet’s Nest Notification arises.

In light of my findings on SOI[10], it is unnecessary to consider in any detail the scope of matters notified to Allianz by the Block Notification in respect of White & Co – there were none.

In light of my findings on SOI[10] and SOI[11], the answer to his question is self evident. The answer is “no.” As with SOI[7], it will not assist to analyse the parties’ arguments further on the assumption that the appeal court takes a different view of these issues, since those arguments would need to be reconsidered in the light of the nature of the notification that it was found had been given in the relevant communications, a fact-specific exercise which cannot be conducted in the abstract and without positive findings on SOI[10] and SOI[11].

As I have noted above, Kennedys started to act for White & Co in respect of the Akbar Claim in June 2017. The 19 October and 22 October Letters were sent well after then.

The 19 October Letter is of note because, although it relates to the Akbar Claim, it makes assertions that are said to be of broader relevance to other potential claims. It is common ground that Kennedys sent the 19 October Letter to White & Co by the Second November Email (during the Allianz Policy Period) and to that extent its awareness of the contents of the letter during the policy period is not in issue. However I commented at [107] above that the issue in respect of the 19 October Letter is not strictly speaking one of awareness but rather one of whether its receipt by Kennedys was capable of amounting to notification.

The potential significance of the 22 October Letter is that it annexes the Freeman Fisher Letter, containing a variety of allegations that Mr Levy is making that are said to be relevant to notification issues. Allianz has made no admission that it was actually sent to or seen by White & Co.

But the Claimants draw attention to the evidence that Mills and Reeve, who acted for White & Co earlier in 2017, had been asked to communicate with them rather than with White & Co directly (Footnote: ⁸⁶). It is a reasonable inference that Kennedys were instructed on the same terms. Further, the Second November Email shows that Kennedys were keeping White & Co updated on the progress of dealings with Mr Levy. It is therefore a reasonable inference that the contents of the 22 October Letter were shared with White & Co.

As I have noted, Allianz admits that Kennedys sent the 19 October Letter to White & Co (Footnote: ⁸⁷). As for the 22 October Letter, Allianz contends that there is no evidence that the letter itself was sent by Kennedys to White & Co, nor that White & Co had received a copy of the Freeman Fisher letter which was enclosed with the 22 October Letter from any other source.

Allianz notes the nature of Kennedys’ retainer, a joint retainer for both White and Co and Allianz and relating to the claim being pursued by “Mr Akbar and others (Footnote: ⁸⁸).” The retainer involved the investigation and defence of “this claim” and reporting to Allianz on ”liability and strategy.” Both Ms Bushen and Mr Roberts say within their statements that the retainer was limited to the Akbar claim.

Further, the joint instruction of Kennedys by Allianz and White & Co as co-principals militates strongly against them being treated as the agent of one for the purpose of notification to the other, since this would risk giving rise to a conflict of interest.

As I have indicated, it is accepted that White and Co were aware of the 19 October Letter in November 2017 (that is to say during the Allianz Policy Period). As for the 22 October Letter, it enclosed the Freeman Fisher Letter relating to the issue of defamation. The defamation was alleged by Freeman Fisher in a letter of 4 August 2017, which makes clear that the allegation is one made against Mr Levy personally and /or Elite Chambers Ltd, the business from which he practices.

The response to that in the Freeman Fisher Letter, is significant in several respects:

It is not entirely clear why Mr Levy sent the Freeman Fisher Letter to Kennedys under cover of the 22 October Letter. The text of that letter suggests that it was sent partly for information purposes (“you will note that I asked several questions”) and partly to seek further information (“please consider responses to the questions that have been posed”).

There is no evidence before the court that Kennedys were instructed by Allianz to act in respect of claims brought by Mr Levy other than under the joint retainer relating to the Akbar Claimants. A general understanding of what was being alleged was likely to be of assistance both to White & Co and to Allianz in dealing with the Akbar Claim further.

In the absence of direct evidence that White & Co were shown these Emails and the Freeman Fisher letter, I consider whether I can draw the inference that they were shown to White & Co. As with the October documents, there is no reason to think that Kennedys were not diligent in their discharge of duties. The contents of the Freeman Fisher Letter attached to the 22 October Letter were, as I have noted, of potential relevant to the defence of the Akbar Claim and therefore may have been of interest to White & Co. The proper discharge of Kennedys’ duties relating to the Akbar Claim would have included taking instructions from White & Co on any matters that might be relevant to the defence of that claim. In order to know whether White & Co were able to give any instructions relevant to the Akbar Claim in respect of matters that Mr Levy was raising in the letter, it would obviously have been necessary for it to be shown the 22 October Letter and its enclosure, the Freeman Fisher Letter.

Further, given that Kennedys are not parties to this action and White & Co had not engaged prior to its liquidation, the failure of any party to produce evidence of such communications is not wholly surprising. Whilst Allianz’s disclosure obligations pursuant to the extended disclosure order included the search of documents provided by Kennedys (see in particular the extended disclosure certificate at E/21/3) and I have no doubt that Kennedys will have sought to identify and provide relevant documents, there is no presumption that they have in fact done so and it is perfectly possible that a communication through this route was missed.

Taking these points together it is more likely than not that the letter of 22 October 2017 and its enclosure, the Freeman Fisher Letter, were sent to White & Co and that this happened during the Allianz Policy Period (Footnote: ⁸⁹).

The Claimants contend that Kennedys received communications from Mr Levy, including the 19 October 2017 letter and the 22 October 2017 Letter and its enclosure, as solicitors acting for Allianz and White & Co under the joint retainer referred to above, and therefore as agent for both.

Allianz equally accept that the letters were received by Kennedys pursuant to the joint retainer, but emphasise that the retainer related to the defence and investigation of the Akbar Claim, not agency for the purpose of receiving notification of claims.

This issue is very closely connected to SOI[13] and my answer to that issue renders this issue academic. Indeed, in closing submissions, the Claimants contend that it is not that necessary to answer this question. For my part, it seems that the issues are better dealt with as part of SOI[16] and SOI[17], but for the sake of completeness I deal with that which the parties invite me to resolve in the List of Issues since the resolution of the issue may be relevant to SOI[16] and SOI[17] in due course.

It is common ground that the receipt of the letters was as a result of Kennedys acting under the joint retainer. I accept Allianz’s argument that the capacity in which Kennedys received the letters is to be judged by the retainer and that the retainer related specifically to the investigation and defence of the Akbar Claim.

The additional question posed in SOI[14], whether White & Co is “to be taken as having been aware of them by virtue of Kennedys having received them” is counterfactual and of no relevance to the outcome in light of my finding of fact that White & Co actually received both letters. In so far as SOI[14] raises a point of law, it is academic on my finding of fact. I consider the point in slightly further length in respect of SOI[15]. However in considering that issue, unlike SOI[14], the role in which Kennedys were acting when they sent the First November Emails to Allianz is arguably relevant to the issue of notification. On the other hand, the role in which Kennedys received the October Letters is irrelevant if in fact White & Co had knowledge of the documents in any event, as I find to be the case.

The Claimants do not contend that I should make a finding that the First November Emails were seen by White & Co at the time. As the Claimants note, Allianz initially claimed privilege in respect of the First November Emails. That would be consistent with Allianz believing that the content did not relate to the joint retainer, since if they did it is difficult to see how privilege could attach. Yet there would be no point in claiming privilege if in fact the document had already been shown to White & Co. Hence, the claim of privilege supports the conclusion that the First November Emails were not in fact sent to White & Co. In any event, Kennedys shared the 19 October Letter and the contents of the First November Emails (though not those emails themselves) with White & Co by virtue of the Second November Email. There would be no obvious point in Kennedys separately having emailed White & Co sharing with them the fact that they had emailed Allianz to like effect as they were emailing White & Co. Hence it is understandable that the Claimants do not seek a finding that the First November emails were sent to or seen by White & Co.

But the Claimants again contend that these documents were sent to Allianz pursuant to Kennedys’ joint retainer with Allianz and White & Co. Since Kennedys was writing to Allianz as agent for both parties, its knowledge and (in this case) its actions are to be imputed to White & Co as a co-principal. As the closing written submissions put it at [56] in respect of the 19 October 2017 Letter, Kennedys sent the letter “as both [White & Co]’s agent and Allianz’s agent and so at least in part on behalf of [White & Co] (fulfilling the requirement in the 2016 Minimum Terms to be provided by the insured).” As Mr Chapman KC said in closing submissions, had Kennedys simply been advising Allianz on the risk of further claims against White & Co this agency would not arise. However, because the communication was sent specifically out of the instruction of Kennedys to act on behalf of White & Co, Kennedys should be treated as writing it on behalf of White & Co. That argument would appear to apply with equal force to the First November Emails.

The Claimants note also that the contents of the First November Emails related to the events at the meeting on 21 November 2017 at which Kennedys received information from Mr Levy at least in part in discharge of its duties as White & Co’s agent so that, again, its knowledge is to be imputed to its principal.

In support of this proposition, the Claimants rely on Bowstead & Reynolds on Agency at Article 95(1) to the effect that “A principal is generally imputed with knowledge relating to the subject matter of the agency which an agent acquired while acting for the principal.” (It is fair to say however that the text thereafter and the authorities referred to show this this principle is in fact qualified in several respects.)

The Claimants draw from this principle the argument that, if the First November Emails were sent to Allianz by Kennedys in their role as agent for White & Co and, if White & Co are to be taken to have knowledge of the contents of their communications, that the emails were sent by Kennedys as agent for White & Co such that this may (Footnote: ⁹⁰) constitute notification under the terms of the Policy or the Minimum Term.

Allianz respond to this argument in like manner to its response on SOI[14], namely that, in so far as the emails were sent to Allianz pursuant to the joint retainer, that retainer related to the defence and investigation of the Akbar Claim. Thus, anything that bears on arguments as to whether sending the documents amounted to an act on behalf of the principal or whether the knowledge of the contents of the documents should be imputed to the principal involves an examination of:

As to the contention that White & Co is “to be taken as having been aware” of the contents, Allianz contend that the nature of any knowledge that White & Co may have either actually had or may be imputed to them is to be examined critically in dealing with SOI[16] and SOI[17].

However Allianz rejects the suggestion that in some way Kennedys may have become the exclusive agent of White & Co for the purpose of notifying claims under the Allianz Policy. Several points are relied on:

The First November Emails enclosed the 19 October 2017 Letter, which on the Claimants’ case involves notification of circumstances and is relevant to the coverage issue. There is no evidence before the court that Kennedys were instructed by Allianz to act in respect of claims brought by Mr Levy other than under the joint retainer with the Akbar Claimants. However, a general understanding of what was being alleged was likely to be of assistance both to White & Co and to Allianz in dealing with the Akbar Claim further. This points to the conclusion that, whether or not the 19 October Letter sent under cover of the First November Emails to Allianz is capable of amounting to relevant notification, in forwarding it to Allianz under cover of the emails, Kennedys were at least in part discharging their duties relating to the joint retainer.

I turn to consider whether White & Co is to be taken as being aware of the contents of the First November Emails. Given that the 19 October 2017 Letter and the content of the meeting with Mr Levy were shared with White & Co by the Second November Email, the significance of this issue is narrow in that:

But what the Claimants seek to draw from the imputed knowledge on the part of White & Co is that the First November Emails were sent by Kennedys to Allianz as agent for White & Co. Although the Claimants rely on the passage from Bowstead & Reynolds cited above in support of this contention, in fact the principle set out there is not concerned with the role in which an agent is acting, but rather the knowledge that is to be imputed to the principal. The mere fact that the principal knows of the existence and contents of a document that is sent by an agent to another person does not prove that it was sent for some purpose which lies outside of the bounds of the agency.

No authority has been cited for the proposition that an agent engaged under a joint retainer is, as a matter of law, the agent for each of the individual principals in dealing with the other. Indeed, this would be contrary to Article 12 of Bowstead & Reynolds, which states that “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, unless a contrary intention appears from the nature of the terms of the authority, or from the circumstances of the particular case.” There is no evidence here of a contrary intention nor are any circumstances identified that mean that a different rule should apply in the particular case.

The implication of the Claimants’ argument as to agency is that the joint retainer of Kennedys was in fact such that Kennedys, who are identified as the agent of White & Co and Allianz jointly for the purpose of investigating and defending the Akbar Claim, became the agent of White & Co exclusively for the purpose of giving notification of other claims to Allianz. I can see nothing in the law of agency that would support a finding that such a change of status could arise, in the absence of evidence that the parities agreed to this and I see no evidence here that any of the relevant players, White & Co, Allianz or Kennedys, agreed to that change of status. Further, it is easy to see that this change of status would potentially put Kennedys in a position of conflict. In particular the very circumstances that arise here might involve enquiries as to whether Kennedys were acting under the joint retainer or under the exclusive agency with White & Co relating to notification of claims. Kennedys would have to be able to demonstrate which agency they were acting under, which might make them in effect the judge of whether they owed duties to the parties jointly in respect of the notification or to White & Co only. A working example of this problem can be seen in the analysis under SOI[17B] below.

For these reasons I reject the argument that Kennedys sent the First November Emails as the agent of White & Co. Rather, I find that those emails were sent pursuant to Kennedys’ duties under the joint retainer to report to its principals on matters relevant to the investigation and defence of the Akbar Claim.

The Claimants argue that a reasonable person would consider that these documents taken separately or together would lead to the conclusion that:

The Claimants argue that this is for the following reasons:

The November 2017 Emails included the following note of what Mr Levy had to say in the November Meeting, in particular his assertion that, of around 90 EIS Companies with which White & Co was involved, “c.£97,000,000 of investment has been procured, but only 3 of the companies show any profit. He has a particularly low opinion of Ben White and seemed to think that all of the EIS schemes are some sort of scam that has been concocted to defraud investors...He is also still actively seeking to recruit further potential Claimants, though no further individuals have been named specifically at this stage.”

Allianz begins it submission on this issue by contending that the 22 October Letter (including the Freeman Fisher Letter) and the First November Emails were not in fact sent to White & Co. For reasons identified under SOI[13] I have found that the 22 October Letter was in in fact sent to White & Co. As I have noted in respect of SOI[15], White & Co probably did not see the First 2017 November Email but were of course aware of its contents and probably did believe that this information was sent to Allianz.

In so far as the Freeman Fisher Letter was dealing with potential claims, this was in the context of a claim for defamation and did not suggest that other claims might be brought. More generally there is nothing in these communications that would lead the reasonable reader to think that that they were referring to matters that might give rise to a claim. Allianz cites the passage of Toulson LJ in Kidsons at [139] to the effect that what is being referred to are matters which are “too vague or remote to be reasonably capable of being regarded in [themselves] as [matters] which might give rise to a claim.”

The reasonable reader of the Kennedys documents would realise that Mr Levy was already acting for people with potential claims against White and Co. That person would then have acquainted themselves with the Akbar Claim and would have been aware of the allegations being made. They would then realise that the additional information being referred to by Mr Levy involved assertions that White and Co were involved in whole-scale misadvising of their clients as to investment in schemes such as those referred to in the Akbar Claim as well as those expressly mentioned in the Kennedys documents.

This is, in my judgment, the description of a problem, “the exact scale and consequences of which are not known” in the words of Gloster LJ see Euro Pools at [39(iii)], but which effects both named people and others, and named investment companies and other similar companies. Whilst the allegations lack specificity, they cannot be said to be too vague to be matters which “might give rise to a claim.” Rather, the communications give every impression that the broader range of issues referred to may well give rise to claims, albeit that the details of those claims cannot be given.

I therefore accept that

However, it goes too far to include within that category (i.e. matters which might give rise to a claim) other investments which were “The subject of similar advice to the Investments identified in the Kennedys Documents.” There is nothing in the material to suggest that White & Co was advising on schemes other than those identified as being similar to EIS Investments (which I have identified as including Seed EIS and Super EIS investments) and FRB or giving “similar advice” in respect of an such investments. The use of the word “similar” here is vague since it is not at all obvious what the similarity would need to be and I see no basis for interpreting these communications as relating to some other unascertained schemes of investment in respect of which White & Co gave advice, even if there are any (as to which I am not clear).

I have noted in respect of SOI[15] above the Claimant’s argument at [56] in its written closing submissions in respect of the 19 October 2017 letter, that Kennedys sent the letter “as both [White & Co’s] agent and Allianz’s agent and so at least in part on behalf of [White & Co].” The submission goes on that “The 19 October 2017 Letter is to be seen in the context of the factual background of the Akbar Letters and the Block Notification. Against such a background, a reasonable person would treat Kennedys’ provision to Allianz of the 19 October 2017 Letter as a further notification in its own right or alternatively further circumstances to be added to the previous notifications.”

If the 19 October Letter was not sent by Kennedys as agent of White & Co, the Claimants acknowledge that a difficulty arises as to whether this can be seen as valid notification, regardless of whether one is concerned with notification under the terms of the Policy or under the Minimum Term. The policy requires notification to be by “the Policyholder.” The Minimum Term requires notification by “the Insured.” Unless the agency argument is successful, this notification cannot be said to have been given by White & Co.

However, the Claimants emphasise the authorities that support the contention that notification does not have to be given by the insured so long as it is effectively drawn to the attention of the insured (see the passage at [10-020] in Colinvaux, cited above). It is not in dispute that Allianz knew the contents to the 19 October 2017 Letter for the simple reason that it was sent to them. The court should treat it as notification of circumstances within the meaning of the policy and/or the Minimum Terms.

Allianz deny that it is correct to characterise Kennedys role in sending the email as White & Co’s agent for the reasons advanced in respect of SOI[15].

In so far as it might be argued that actual receipt of the letter by Allianz avoids the need for the Claimants to prove notification by the route specified in the contract and/or the Minimum Terms, Allianz contend that this is inconsistent with the nature of such a term as a condition precedent.

The contractual terms and the Minimum Term are unequivocal in requiring notification by the insured/policyholder. This is a condition precedent to Allianz’s liability, following the reasoning of the judgment of Rix LJ in Kidsons at [114] because

I repeat the analysis above in respect of SOI[15]. This applies with equal force to the argument that the 19 October Letter was sent as agent of White & Co as it does to whether the First November Emails were sent in that capacity. I thus conclude that the 19 October 2017 Letter and enclosure were not sent by Kennedys to Allianz as agent of White & Co. It follows that the purported notification was not given by the insured/policyholder.

As to the alternative argument that compliance with the condition that notice be by the insured/policyholder was not a condition precedent of Allianz’s liability, the position in this case is very similar to that of the insurer in Kidsons. The terms of both the Policy and the Minimum Term make clear that they deal with a deeming provision and I find no rational basis to distinguish the reasoning here from that of Rix LJ in Kidsons. Accordingly I am satisfied that compliance with these terms are conditions precedent to the liability of Allianz.

As to the argument that compliance with a condition precedent as to notification is not necessary where the insured has notice of the claim from some other source, I do not accept that this proposition can hold good on the facts of this case. The passage from Colinvaux’s Law of Insurance, 13^th Edition at [10-020] cited above shows that in some circumstances, notification from some other source may suffice. But I do not accept that departure from the usual rule that notification must be in accordance with the terms of the contract, is justified here:

In so far as the ratio of Barrett Bros v Davies can clearly be identified, it is of course binding on this court. But given the doubt that has been expressed about the correctness of the decision from several sources, it is in my judgment best confined in its application to the particular facts, namely the notification of an identified loss by an authoritative source. It has no application here where the alleged notification is of the circumstances of many potential claims from a source (the lawyer acting for potential claimants) who inevitably is acting on the instruction of his client, rather than as an independent public body with no interest in the outcome of the insurance claim (as was the position of the police in Barrett Bros v Davies).

It follows that the Claimants cannot rely on the 19 October Letter as notification of circumstances for the purpose of compliance either with the Allianz Policy or the Minimum Term.

The Claimants argue that by sending the 22 October Letter to Kennedys, Mr Levy was notifying circumstances in accordance with the Allianz Policy and/or the Minimum Terms by the following chain of reasoning:

Allianz reject the Claimant’s analysis for two reasons:

I have dealt with my analysis of the nature of Kennedys’ agency in respect of SOI[15] above. I identified that the instant issue is one where the potential conflicts that the Claimants’ analysis of Kennedys’ role involve are very clear.

In my judgment, Allianz’s points on this issue are well made. Kennedys’ express retainer related to the investigation and defence of the Akbar Claim. It is neither necessary nor desirable to construe that agency in a broader fashion. Its role in receiving documents and sending them to its co-principals is easily explained by its performance of its role pursuant to the joint retainer and does not require the court to adopt what would be the much more difficult interpretation of it acting as White & Co’s agent for the purpose of receipt of a document, as White & Co’s agent for the purpose of conveying the contents of that document to Allianz and simultaneously as Allianz’s agent for the purpose of the receipt of knowledge of the contents of the communication.

If the Claimants’ analysis is accepted, Kennedys was simultaneously acting as the agent of the insured/policyholder for the purpose of receiving notice from a client and giving notice to its insurer and the agent of the insurer for the purpose of receiving notice. This would not be a relationship of co-principals but rather two separate agency relationships.

As I noted in respect of SOI[15], such a relationship could be created by the express agreement of the parties (though doubtless they would have been astute to the potential for conflicts of interest to arise) but that did not happen here. To imply such roles with their associated obligations creates a position in which a conflict of interest may arise without any evidence that any of the players have agreed to that situation.

The agency that arises in this case is a creature of the contractual terms that the parties have expressly or impliedly agreed, to be judged in accordance with the usual rules of contractual interpretation and the implication of terms. There is nothing in the circumstances of this case that would mean that the relationship contended for by the Claimants should be implied as a matter of law nor that, on the facts, such a relationship should be implied. It follows that the answer to SOI[17B] is “no”.

The Claimants rely on notification from the following of the Kennedys Documents:

These communications amounted to notification of specific claims as variously set out, but also Hornet’s Nest Notification relating to White & Co’s practice generally such that any reasonable reader would conclude that any person who had invested in EIS or similar schemes following advice from White & Co may have a claim against that firm.

Allianz’s assertions in respect of the contents of the documents have been set out above. It is unnecessary to repeat them because I have already made findings about the meaning of the documents.

Putting aside those arguments Allianz does not dispute that these documents might cause one to believe that others had suffered loss through investing on the advice of White & Co in EIS and similar schemes. But it contends that these communications are not “notification” within the meaning of the Allianz Policy or the Minimum Term at all. It argues that an initial notification cannot be widened by the discovery of later problems unless those later problems are themselves the subject of valid notification (see Akenhead J in Kajima). It is of course possible for an insured to give Hornet’s Nest Notification, where the circumstances notified did not identify specific incidents, transactions or acts/omissions of the insured. But Hornet’ Nest Notification had not been given here prior to receipt of the Kennedys’ documents and, on an objective reading, the Kennedys’ Documents did not purport to notify circumstances of claims.

In particular, of the documents relied on:

In any event, the Kennedys Documents do not amount to a notification of a problem “in general terms” such as to be capable of amounting to Hornet’s Nest Notification of the type referred to by Gloster LJ in Euro Pools at [39(iv)].

I have already held in respect of SOI[17A] and SOI[17B] that the relevant elements of the Kennedys Documents were not communicated to the insurer in circumstances that are capable of amounting to notification either under the terms of the Allianz Policy or in accordance with the Minimum Term.

If I were wrong about this, it would be necessary to consider whether in fact the contents of the documents amounted to notification. The summary of the law in Euro Pools show that the courts take a relatively expansive view of what amounts to notification. If, as I have found to be the case, the contents of the October Letters would lead a reasonable person to the conclusion that claims might be made by people who had been advised by White & Co, whether or not listed in those documents and in respect of the investments in the companies listed in those documents or in similar investments, the fact that this information was shared with Allianz would be good Hornets’ Nest Notification so long as White & Co had the requisite knowledge of the matters referred to in the documents. Given my findings that White & Co saw the relevant communications during the Allianz Policy Period, I would have found this to be good notification.

The alleged notification in the Kennedys Documents is clearly not limited to specific investments, specific companies or specific investors. Applying the concept of “a problem, the exact scale and consequences of which are not known” (Footnote: ⁹²), the contents of the Kennedys Documents, if capable of amounting to notification at all include reference to a variety of circumstances in which investors, having been advised by White & Co, had invested in companies that had failed where, on the Claimants’ case, the failure of the company was predictable or had invested in schemes that provided up front tax benefits which in fact were liable to challenge by HMRC. This is a clear example of the notification of problems (inappropriate tax advice and inappropriate investment advice) where the exact scale and consequences of the problem are unknown. I do not consider that the fact that the actual nature of the tax problem may differ slightly between EIS, Seed EIS, Super EIS and FRB investments prevents the communications from amounting to Hornet’s Nest Notification of claims in any category of investment.

Accordingly, if the Kennedys documents had been capable of amounting to notification, I would have found that in fact they did notify circumstances which might give rise to a claim against White & Co in so far as they related to claims by people who had been advised by White & Co, whether or not listed in October Letters and in respect of the investments in the companies listed in those documents or in similar investments, namely other EIS, Seed EIS and/or Super EIS investments.

The Claimants argue that all of the claims before the court fall within the ambit of Hornet’s Nest Notification. White & Co’s alleged negligence was in respect both of tax and investment issues. The Claimants all allege that they have suffered loss by way of loss of tax relief, the imposition of penalties and/or interest by HMRC and/or the loss of all or part of their investments. The Kennedys Documents relate to all of these issues:

Allianz again contends that the failure of the notification to identify the general nature of the problem that is being notified means that it is not possible to show the relevant causal nexus between what is said to be the subject of notification and the particular claims brought by the Claimants in this action.

I have already held in respect of SOI[18] that, if I am wrong about the role played by Kennedys in respect of the October Letters, these would amount to the notification of circumstances which might give rise to a claim within the ambit of Hornet’s Nest Notification. The notification is broad in nature, as I have noted above. It covers both the assertion that White & Co had been advising clients to invest in companies that have failed (and indeed in many cases which were never intended to succeed) and that the tax advice that was given was not likely to withstand challenge by HMRC.

By way of example, in the letter of 19 October 2017, Mr Levy alleges

I have set out at [84] above a passage from the Freeman Fisher Letter dealing with the allegation that companies in which White & Co advised investment had poor track records of success.

Taking the Kennedys Documents together, they provide Hornet’s Nest Notification of circumstances sufficient to comply with the notification obligation in respect of any circumstances which are akin to that being notified, namely:

These no longer require determination in light of the concession of Allianz referred to above.

The Claimants contend that the definition of “Tax Mitigation Scheme” within the Tax Mitigation Endorsement is determined by the policy itself, not by any other source and applies only to transactions which meet all of the requirements of the definitions, namely that they are:

Accordingly the court must focus on the particular transaction in issue, determining whether it achieves a particular tax outcome on purpose and whether it is “artificial.” As to the last of these, the experts (and the parties) agree that the meaning of the word in this context is best summarised in the judgment of the Privy Council in Commissioner of Taxpayer Audit and Assessment v Cigarette Company of Jamaica [2012] 1 WLR 1794. The Board was concerned with whether a transaction fell within Section 16 of the relevant Jamaican legislation, the Income Tax Act 1954, which makes special provision in relation to artificial or fictitious transactions direction at the reduction of tax liability. I am reminded of [22] of the judgment, referred to above.

The experts also considered the line between tax avoidance on the one hand and legitimate tax mitigation on the other. They considered the judgment of Lord Nolan in IRC v Willoughby [1997] 1 WLR 1071 at 1079, where he accepted the argument of leading counsel for the Crown as to the meaning of “tax avoidance” for the purpose of section 741 of the Income and Corporation Taxes Act 1988 as then in force:

“The hallmark of tax avoidance is that the taxpayer reduces his liability to tax without incurring the economic consequences that Parliament intended to be suffered by any taxpayer qualifying for such reduction in his tax liability. The hallmark of tax mitigation on the other hand is that the taxpayer takes advantage of a fiscally attractive option afforded to him by the tax legislation, and genuinely suffers the economic consequences that Parliament intended to be suffered by those taking advantage of the option. Where the taxpayer’s chosen course is seen upon examination to involve tax avoidance (as opposed to tax mitigation), it follows that tax avoidance must be at least one of the taxpayer’s purposes in adopting that course, whether or not the taxpayer has formed the subject motive of avoiding tax.”

On the issue of what amounts to a taxpayer’s “purpose,” the Claimants note the judgment of Falk LJ in Blackrock HoldCo LLC v HMRC [2024] EWCA Civ 330 where, in dealing with the question of the “unallowable purpose” test in sections 441 and 442 of the Corporation Tax Act 2009, she said:

“[124] … For present purposes “object” can also be regarded as synonymous with purpose. So far as relevant to this case, and gathering the points together, I would summarise the key points as follows:

a)

Save in “obvious” cases, ascertaining the object or purpose of something involves an inquiry into the subjective intentions of the relevant actor.

b)

Object or purpose must be distinguished from effect. Effects or consequences, even if inevitable, are not necessarily the same as objects or purposes.

c)

Subjective intentions are not limited to conscious motives.

d)

Further, motives are not necessarily the same as objects or purposes.

e)

‘Some’ results or consequences are ‘so inevitably and inextricably involved’ in an activity that, unless they are merely incidental, they must be a purpose for it.

f)

It is for the fact finding tribunal to determine the object or purpose sought to be achieved, and that question is not answered simply by asking the decision maker.”

The Claimants draw attention to several points of Mr Francis’ evidence where he agreed with the following propositions put to him by Mr Chapman KC: