The Court of Appeal has partly allowed appeals by Quinn Insurance Limited (in administration) and PricewaterhouseCoopers (PwC) over requests for further particulars in their ongoing audit negligence case. The judgment, delivered by Mr Justice Gerard Hogan on 21 March 2017, dealt with the scope of information to be provided before trial. It did not decide whether PwC was negligent or determine the damages claim.
Quinn Insurance alleges that PwC’s audits of its financial statements and regulatory returns for 2005 to 2008 failed to identify materially understated technical provisions for insurance claims. PwC denies the claim. The judgment describes the projected damages claim as being in the order of €800 million. The action was still at an early procedural stage: pleadings had not fully closed and discovery had not begun.
The High Court had directed Quinn Insurance to answer some of PwC’s requests for further details and refused others. The Court of Appeal allowed Quinn Insurance’s appeal against orders requiring it to explain the reasons for alleged under-provisioning, provide detailed breakdowns of claimed underwriting losses, and give specific detail about how it would have changed prices or avoided losses. The court considered those requests went beyond defining the case and sought evidence that could be dealt with at trial.
However, Quinn Insurance must provide a broad outline of the range of contemporaneous information and data it alleges PwC should have considered during the audits. The court said that information was central to the professional negligence claim and necessary for PwC to understand the case it had to meet.
On PwC’s cross-appeal, the court upheld the refusal of requests for detailed steps and calculations behind Quinn Insurance’s re-estimation of technical provisions. It allowed PwC’s appeal concerning the actuarial standards and information and data relevant to that re-estimation, requiring a broad outline. It also required general details of the loss-making business Quinn Insurance says it would have addressed, and broad details of savings it says would have followed from exiting Great Britain and Northern Ireland markets.
The court rejected PwC’s requests for detailed breakdowns of reopened claims, including their value, reasons for reopening and classification by business or region. Quinn Insurance had supplied counts, which the judgment records rose from 1,282 in 2005 to 31,350 in 2008. The court said the further analyses sought were not part of the pleaded case and would require an onerous exercise.
The ruling concerns pre-trial particulars only. The underlying claim and PwC’s liability remain for later proceedings.