Accountancy firm PriceWaterhouseCoopers (PwC) has won an appeal in which it sought security for €30m in legal costs involved in a pending High Court case against it.
PwC is being sued by Quinn Insurance Ltd (QIL) for €900m 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 €1bn and its losses were met by a 2pc levy on all non-life insurance policies in the State.
Yesterday, the Court of Appeal (CoA) said the High Court must revisit its refusal of PwC's application that Quinn should put up the funds of 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 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 with complete and truthful information.
It also claims any losses incurred by Quinn due to its continued trading were not caused by its (Quinn's) reliance on PwC, but 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 upfront what the parties agreed would be the €30m legal costs of the case.
In February 2018, the High Court refused the PwC application.
PwC appealed this, claiming the High Court 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 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, she said.
To expect PwC to bear the risk of having to meet estimated costs of €30m seemed intrinsically unfair, the judge added. PwC 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 that the amount and mode of security must go back to the High Court for determination.