Quinn Insurance Limited (under administration) v. Pricewaterhousecoopers (A Firm)

Factual and Procedural Background

The Plaintiff, an insurance company incorporated in 1995 and now in administration, initiated proceedings in 2012 against the Defendant, its former auditor. The Plaintiff claims damages for alleged breach of contract, negligence and breach of duty arising from the Defendant’s audits and related regulatory work. Because the Plaintiff is insolvent, its litigation costs are funded by the Insurance Compensation Fund.

The action was admitted to the Commercial Court on 24 July 2013. The Defendant sought security for costs pursuant to s. 52 of the Companies Act 2014. The High Court (Judge [Last Name]) refused that application. On appeal, the Court of Appeal (judgment delivered 21 April 2020) reversed the High Court, holding that security should be ordered and that the quantum and mode of security were to be fixed by the High Court. The Court of Appeal also imposed a general stay on the substantive proceedings pending provision of security.

The Plaintiff applied, in time, for leave to appeal to the Supreme Court. The present determination, dated 28 July 2020, decides that leave should be granted.

Legal Issues Presented

1. Whether the Court of Appeal erred in principle by ordering security for costs after finding that the Plaintiff had established “special circumstances” justifying a refusal of such security.
2. Whether, in exercising its discretion under s. 52 of the Companies Act 2014, a court may treat the absence of “claim-stifling” as a factor tipping the balance in favour of ordering security.
3. Whether the proceedings raise issues of general or exceptional public importance sufficient to displace an order for security for costs.

Arguments of the Parties

Plaintiff's Arguments

• The Court of Appeal adopted a novel and erroneous approach by considering whether an order for security would stifle the claim even after “special circumstances” had been established.
• This approach is inconsistent with established jurisprudence and unsupported by authority.
• The Court of Appeal wrongly concluded that the case lacked features bringing it within the “public interest” exception in s. 52 of the Companies Act 2014.

Defendant's Arguments

• The judgment applied well-settled principles; no issue of general public importance arises.
• Security for costs is discretionary; demonstration of “special circumstances” does not automatically preclude an order for security (citing, inter alia, West Donegal Land League Ltd. v. Údaras na Gaeltachta).
• The Plaintiff’s premise that a court must refuse security unless the order would stifle the claim is incorrect; the Court of Appeal treated “non-stifling” merely as one discretionary factor.
• The Court of Appeal correctly held that the proceedings do not constitute litigation of exceptional public importance.

Table of Precedents Cited

Court's Reasoning and Analysis

The Supreme Court noted that the constitutional criteria for leave to appeal have been extensively addressed in prior determinations and that the parties’ written submissions are publicly available. The Court therefore confined itself to assessing whether the application presented issues of general public importance or whether an appeal was otherwise necessary in the interests of justice.

It held that the questions raised—particularly the correct test for security for costs under s. 52 of the Companies Act 2014 and the role of the public-interest exception—are matters of genuine public importance. The Court further considered that the Plaintiff’s challenge to the Court of Appeal’s treatment of “claim-stifling” warrants authoritative clarification. On that basis, leave to appeal was granted.

The Court fixed 19 November 2020 for the substantive hearing, directed case management in September 2020, and invited short written submissions on the Plaintiff’s application to lift the stay imposed by the Court of Appeal.

Holding and Implications

LEAVE TO APPEAL GRANTED.

Immediate Effect: The Plaintiff may bring a full appeal to the Supreme Court against the Court of Appeal’s order for security for costs and the associated stay. A hearing date has been set and further directions issued regarding the interim stay.

Broader Implications: While the determination sets no new substantive precedent, the forthcoming appeal is poised to clarify the interaction between “special circumstances,” the potential stifling of claims, and the public-interest exception under s. 52 of the Companies Act 2014.