An ability to pay a legal bill of €29 million remains to be approved before a case by the administrators of insolvent insurer Quinn Insurance Ltd (QIL) against the firm's former auditors can go ahead, the High Court has heard.
The joint administrators of QIL are suing PriceWaterhouseCoopers (PwC) for some €800 million claiming negligent auditing of the insurance underwriter between 2005 and 2008. PwC denies the claims.
The case was initiated in 2012 and a central feature of the pre-trial process was whether the QIL joint administrators, Michael McAteer and Paul McCann who were appointed by the Financial Regulator in April 2010, should be required to provide security of costs should QIL lose the case. This was in circumstances where it is an insolvent company whose main purpose was now to pursue this action given most of the Quinn insurance business had been transferred.
The matter was finally determined last June when the Supreme Court ruled QIL had to pay €5m “interim security” towards the PwC legal costs as the price of the court not placing a stay on QIL’s action.
The issue of what the full cost of security should be had then to be determined by the High Court.
The matter came for hearing before Mr Justice Denis McDonald on Tuesday when he was told the parties had agreed the total sum for security should be just over €29 million. The €5 million interim security, along with another €500,000 already paid to allow an appeal go ahead, had already been provided leaving some €23,520,834 to be provided.
The court heard QIL had proposed that it would make an application next month to the president of the High Court to approve the drawing down from the Insurance Compensation Fund (ICF), which is how payouts have been dealt with in the past, should QIL lose the case.
Declan McGrath SC, for QIL, said the €5 million interim security had already been approved and the remaining €23.5 million would be ring-fenced once approval was coming from the High Court president. That approval would only be where the president is satisfied the ICF has or will have sufficient funds for any such drawn down, he said.
It is recognised in the rules of the superior courts that there is a distinction between the State providing a comfort or guarantee (in relation to such payments) than in respect of other persons, he said.
Paul Sreenan SC, for PwC, said this was not acceptable to his side. The normal way of providing security was the lodging of cash or an equivalent bond to court which would be directly accessible.
His clients were 100 different individuals who would be exposed in relation to this matter even if successful in its defence. QIL was saying it was entitled to some special position which was rejected by both the Court of Appeal and the Supreme Court, he said.
There was also a lack of clarity about whether the ICF was even intended to form the financing of legal action as distinct from providing payouts for the insurance business, he said. It was also possible there could be difficulties with a political willingness to pay this money in the future and in circumstances where there was almost certain to be a change in government when that time arrived, he said.
Mr Justice McDonald expressed concern about what seemed to be a level of uncertainty about how the money would be ring-fenced and that he (Judge McDonald) had not been told what matters will be put before the High Court president.
The judge agreed to a suggestion from Mr McGrath that the matter should be adjourned until after the application is made to the president of the High Court.
It was absolutely crucial, as the Supreme Court had said, that this matter be brought on for hearing, the judge said. He complimented the parties on the agreement reached so far in relation to the security amount and urged them to continue such constructive engagement.