Insolvent Insurance firm Quinn Insurance has been told by the Supreme Court that it must provide security for costs in an upcoming multi million euro action against accountancy firm PriceWaterhouseCoopers.
The case was initiated in 2012 over PWCs auditing of Quinn Insurance. It has yet to be given a hearing date but it has been agreed that costs would be €30 million.
The High Court will decide later exactly how much security, expected to be provided from the State's Insurance Compensation Fund (ICF), must be provided.
QIL had an underwriting business of €1 billion and its losses were met by a 2% levy on all non-life insurance policies in the State after it was placed in administration in 2010.
QIL's primary business now is the prosecution of its claims against PWC over its alleged negligent auditing of the insurance underwriter between 2005 and 2008. PWC denies the claims.
The High Court had previously refused to order QIL to provide security for costs but this was successfully appealed by PWC to the Court of Appeal after which QIL brought a further appeal to the Supreme Court.
That appeal centred on issues concerning the appropriate test for security for costs. It was unanimously dismissed by the court.
The Chief Justice said security for costs should not be ordered if there is a prima facie basis for suggesting the impecuniosity (impoverishment) of the relevant plaintiff is due to the alleged wrongdoing.
Even if that test is not met, the court may consider whether it is likely the proceedings will be stifled and take the result of that consideration into account in assessing whether ordering or refusing security runs the least risk of injustice.
QIL has made out no special circumstances, either on the basis of "impecuniosity due to alleged wrongdoing", or the public interest in ensuring the case proceeds, for a refusal to order security, he held.
The Chief Justice said explanations given as to how QIL could have remained as a solvent trading entity if the wrongdoing alleged against PWC had not occurred "are very much at the speculative end of the spectrum".
Separately the court rejected an appeal raising similar legal issues. It upheld an order requiring two companies involved in bottling and distributing international spirits brands to provide €1m security for costs in their action alleging Irish Distillers Ltd is abusing a dominant position in the Irish whiskey market.
Protégé International Group (Cyprus) Ltd and Avalon International Management Inc, incorporated in Panama, have sued IDL, a subsidiary of Pernod Richard S.A., alleging it has refused over several years since 2002 to supply them with Irish whiskey.
IDL opposes the action and previously secured a High Court order for security for costs.
The Supreme Court dismissed the companies appeal over a COA decision affirming the High Court order. The Chief Justice said the companies had not established their current impecuniosity (impoverishment) was due to the wrongdoing alleged against IDL in the case and nor had they shown a likelihood the proceedings would be stifled if security was ordered.
Reacting to the judgement André Levy, Chairman of Protégé International and Avalon International Management said they were "very disappointed with today's decision. It seems at odds that the court has found that there is a genuine basis for our complaint, and yet the opportunity to have this complaint heard is being hampered by an obvious tactic by a bigger player with endless resources.
"We will now take this time to review the findings in full as outlined by the Chief Justice, and will make a further comment when we have done so," the statement added.
