PwC wins appeal for €30m security in Quinn Insurance court case
Posted on 21st April 2020 at 21:36
Accountancy firm is being sued by Quinn Insurance Ltd for €900m over auditing
Accountancy firm PricewaterhouseCoopers (PwC) has won its appeal over being refused an order requiring €30 million security to be provided for its legal costs of a pending High Court case relating to its auditing of Quinn Insurance.
The matter will now go back to the High Court to decide exactly how much security for costs must be provided.
PwC is being sued by Quinn Insurance Ltd for €900 million over its auditing of the now insolvent insurance underwriter.
The case arises from Quinn being placed in administration in June 2010. It had an underwriting business of €1 billion and its losses were met by a 2 per cent levy on all non-life insurance policies in the State.
On Tuesday, the Court of Appeal (CoA) said the High Court must revisit its refusal of PwC’s application that Quinn should put up security for costs of its legal action should it lose the case.
Quinn’s primary business now is the prosecution of its claim against PwC in which it alleges breach of contract, negligence and breach of duty, the CoA said.
The alleged breaches arise from the manner in which PwC conducted its audits of certain aspects of the Quinn business and its meeting of certain regulatory requirements, it is claimed.
PwC denies the claims, contends it has no liability and says Quinn failed to provide it (PwC) with complete and truthful information.
It also claims any losses incurred by Quinn due to its continued trading were due to decisions taken by Quinn itself and/or the actions of the administrators.
PwC first asked the High Court to order Quinn to provide up front what the parties agreed would be the €30 million legal costs of the case. In February 2018, the High Court refused PwC’s application.
PwC appealed, claiming the High Court had erred in finding Quinn had made out a prima facie case that its inability to pay costs was the result of the alleged wrongdoing of PwC.
It also argued the High Court had erred in finding that the security application should be refused on the basis the proceedings raised issues of general public interest and exceptional public importance.
Quinn opposed the appeal.
In an electronically delivered judgment, Ms Justice Marie Baker, on behalf of a three-judge CoA, said Quinn had arguably met the test that special circumstances exist which entitle a court to exercise its discretion not to order security for costs.
But that did not mean security would be inevitably refused. That discretion seeks to find a balance of justice between the parties, she said.
To expect PwC to bear the risk of having to meet estimated costs of €30 million seemed intrinsically unfair. While Quinn had the benefit of being a limited liability company, PwC did not and its individual partners would be liable for these enormous costs should Quinn win, she said.
She was satisfied that because of unusual factors, including that Quinn has financial backing for its own costs, the litigation is likely to continue even if security has to be provided.
The judge also found that because the interests pursued in the litigation “are wholly commercial”, she did not consider the High Court was correct to treat this as a public-interest case of sufficient importance to justify a departure from the requirement that security for costs be provided.
She allowed the appeal and said the amount and mode of security must go back to the High Court for determination.
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