40m documents being collected for €1bln legal action over alleged negligent auditing of Quinn Insurance
Published 26/06/2014 | 17:07
AN estimated 40 million documents are being collected for a legal action over the alleged negligent auditing of Quinn Insurance's accounts, the High Court heard.
The joint administrators of Quinn are claiming some €1 billion damages against its former auditors, Price WaterhouseCoopers (PWC).
Should the administrators win their case, listed for hearing in 2016, any damages recovered will be used to partly or fully repay the State's Insurance Compensation Fund from which some €1.158bn has been drawn down to date to meet claims of Quinn policy holders. Further draw downs are expected.
The President of the High Court, Mr Justice Nicholas Kearns, rejected an offer by Bernard Dunleavy BL, for the joint administrators, for lawyers handling the PCW case to give the court an "unvarnished" view of the prospects for success in that litigation.
Mr Dunleavy said it was in the public interest matters raised in any such hearing should be confidential and, if the court wished such a hearing, he would make an application under provisions of the Insurance Act for the hearing to be held behind closed doors.
Mr Justice Kearns thanked the administrators for the offer but said he considered such a hearing could make the court "almost a player" in the litigation and he would decline the offer.
Earlier, Mr Dunleavy, when presenting the 15th report of joint administrators Michael McAteer and Paul McCann to the court, said they had made a profit of some €208m arising from property sales, currency hedging and other factors, over the past year. Of that figure, some €100m was previously repaid to the compensation fund.
Some of those profits arose from the High Court seeking firm information from the administrators concerning fluctuations of assessments of claims reserves and after the court expressed a view concerning the benefits of taking a hedging position on Sterling, counsel outlined.
Some €26m profits were made from the hedging and the administrators had also negotiated an €18m reduction of cash with Liberty Insurance and made €16m on sales of properties.
A wind farm was among properties sold and other properties are to be sold later this year, including the company's largest property, located in Cork and a landfill site in Co Armagh.
Some €17m had also been saved against end of year claims estimates for 2013, counsel said.
There were some 10,500 claims outstanding in 2011 but these had been reduced to 3,500. It was expected new claims would peter out to almost zero in the next 12-18 months.
The transfer of the healthcare part of the company's business to Swissre was expected to come before the court for approval later this year while sale of the general insurance business was expected to come up for court approval next year.
The administrators were also seeking approval for their fees which had been set according to reduced rates previously approved by the court, he said. The fees remained "very significant".
Dealing with the action against PWC, counsel said it was expected some 40 million documents would be involved in the legal disclosure (discovery) process.
Quinn Insurance was required to make large discovery for the separate proceedings brought by members of the Quinn family against State-owned IBRC and the costs of that discovery would be met by IBRC, meaning they would not be costs in the administration process.
Mr Justice Kearns said he would read the administrators' report over the coming days and would send for counsel should he require clarification of any matters.
Arising out of the administration, some €1.158bn has been paid out of the compensation fund resulting in a two per cent levy on all non-life insurance policies. The administration began in 2010 and is expected to end in 2016.