Quinn Insurance Limited v. PricewaterhouseCoopers

Irish insurer Quinn Insurance Limited (QIL) (plaintiff) sued PricewaterhouseCoopers (PwC) (defendant) for negligent auditing after QIL suffered a financial collapse and was placed into administration. QIL sought over €800 million in damages, and PwC faced litigation costs of roughly €30 million. PwC sought security for its costs under § 52 of the Companies Act 2014, which allowed for security from an impecunious corporate plaintiff (i.e., a plaintiff with little money) if there was reason to believe that the plaintiff could not pay the defendant’s costs if the defendant prevailed in the action. The statute provided that the plaintiff’s action would be stayed until security was provided. The High Court refused PwC’s request, reasoning that special circumstances warranted denying security because (1) QIL had established a prima facie case that its impecuniosity was due to PwC’s alleged wrongdoing (i.e., because QIL would have addressed its solvency issues had PwC timely made QIL aware of QIL’s true financial position), and (2) the action involved a matter of exceptional public importance. The Court of Appeal reversed and ordered QIL to provide security. The court held that although QIL had established a prima facie case that its impecuniosity was due to PwC’s alleged wrongdoing, ordering security would not stifle the proceedings because money to pay PwC’s costs might be available from the Insurance Compensation Fund (ICF). The Court of Appeal also held that the matter was not so publicly important that the case should be allowed to proceed without security. On appeal to the Supreme Court of Ireland, QIL asserted that the Court of Appeal had improperly considered whether ordering security would stifle the proceedings even after determining that QIL had established special circumstances warranting a refusal of security. PwC sought to uphold the Court of Appeal’s decision but argued that the lower courts had incorrectly found that QIL’s impecuniosity was due to PwC’s wrongdoing. PwC alleged that QIL’s evidence that it would have remained solvent absent the alleged wrongdoing was speculative and self-serving.