Anti-avoidance endorsement/deed of indemnity

The liquidator of an avionics company sought damages from its former auditors for professional negligence

What happened?

The challenge for the joint liquidators was that any action would be heavily defended by the auditors and their professional indemnity insurers. Harbour Underwriting provided an adverse costs policy to the liquidators.

As is common to discourage claims from being made, the defendant applied for and received a security for costs order requiring the liquidator to pay a significant sum into court to cover the defendant’s costs should the claimant lose.

The order was for a sum significantly in excess of the limit of indemnity under the policy, putting the liquidators under financial pressure to top up the existing adverse costs policy. At the same time, the defendant made a ‘low ball’ offer to settle the action. If the liquidators could not address the security for costs ordered, then they would have no choice but to accept the low offer.

Harbour Underwriting agreed to more than double the limit of indemnity. In addition, we agreed to provide an anti-avoidance endorsement such that the liquidators would not need to pay the substantial security for costs into court. Instead, they paid a fraction of that by way of the anti-avoidance premium, thus overcoming the defendant’s attempt to stifle the claim.


Once security for costs had been provided, the defendant had no choice but to focus on the merits of the claim, and eventually agreed to a mediation. At the mediation, the action was settled when the defendant offered to pay a sum which was 20 times higher than the original ‘low ball’ offer.


Harbour Underwriting is experienced in providing solutions to address security for costs, and provides this security by way of an anti-avoidance endorsement and/or a deed of indemnity, which have been accepted by both opponents and courts over the years as an alternative to paying much larger amounts into court.

We are flexible and focus on providing products to suit our customers.

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