## Facts

- Quinn Insurance Limited (under administration) sued its former auditors, PricewaterhouseCoopers, alleging negligent and contractual failures in statutory audits and regulatory returns for 2005–2008 and seeking damages exceeding €800 million.
- The plaintiff claimed the audits gave unqualified assurances that obscured its true financial and regulatory capital position and that proper qualification would have prompted timely remedial steps to avoid collapse.
- The dispute before the Supreme Court concerned security for costs under s. 52 of the Companies Act 2014, not the merits of the negligence and contract claims.
- The defendant sought security on the basis that the plaintiff was unable to satisfy an adverse costs order and that the defendant had a bona fide defense.
- The High Court accepted the plaintiff’s inability to pay but refused security, relying on “special circumstances,” including an asserted causal link between the defendant’s alleged wrongdoing and the plaintiff’s impecuniosity and the claimed public importance of the litigation.
- The Court of Appeal ordered security, finding the action would not be stifled and that public importance did not justify refusal.
- The Supreme Court granted leave to consider the applicable test for “special circumstances,” including the evidential standard for proving that the defendant’s alleged wrongdoing caused the plaintiff’s inability to pay and the weight to be given to public interest.

## Issues

1. Whether the plaintiff established “special circumstances” sufficient to refuse security for costs despite its inability to pay and the defendant’s bona fide defense, particularly by showing on a prima facie basis that the defendant’s alleged wrongdoing caused the plaintiff’s impecuniosity.
2. How, if at all, asserted public interest affects the security-for-costs analysis under s. 52.
3. Whether ordering security would stifle the proceedings such that it would be unjust or disproportionate.

## Decision

- The Supreme Court affirmed the Court of Appeal and required the plaintiff to provide security for the defendant’s costs.
- The Court held that the statutory threshold conditions were met: the defendant had a bona fide defense and there was reason to believe the corporate plaintiff could not pay an adverse costs award.
- The Court concluded the plaintiff did not meet the evidential standard to show, as a “special circumstance,” that its impecuniosity was caused by the defendant’s alleged wrongdoing.
- The Court held that public importance, while present, did not displace the defendant’s entitlement to protection from irrecoverable costs on the facts.
- The Court agreed that the evidence did not establish that the order would stifle the litigation, given potential funding avenues.

## Legal Principles

- Under s. 52 of the Companies Act 2014, where a corporate plaintiff is unable to meet an adverse costs order and the defendant shows a bona fide defense, the court may order security unless it would be unjust in light of “special circumstances.”
- Where “special circumstances” are argued on the basis that the defendant’s alleged wrongdoing caused the plaintiff’s impecuniosity, the plaintiff bears the onus of providing a credible evidential basis for that causal link; assertion and speculation are insufficient.
- The plaintiff must provide concrete supporting material (often including financial and accounting evidence) to connect the alleged wrongdoing to its present inability to pay costs.
- Public interest may be a relevant factor in the discretionary balance but is not determinative and cannot, without more, negate the statutory protection intended for defendants.
- An order for security should not operate as an absolute barrier to access to justice; however, absent proof that proceedings will be stifled, requiring security in very high-value litigation can be proportionate and lawful.

## Conclusion

The Irish Supreme Court upheld an order requiring an insolvent corporate plaintiff to provide security for costs, holding that the plaintiff failed to substantiate a prima facie causal link between the defendant auditor’s alleged wrongdoing and the plaintiff’s impecuniosity and that public interest and unproven stifling did not justify refusing security.


Quinn Ins. Ltd. v. PricewaterhouseCoopers, [2021] IESC 15 (Ir. 2021)