The Supreme Court dismissed an appeal by Quinn Insurance Limited (under administration) in a dispute with PricewaterhouseCoopers (a firm) over security for costs. In a judgment delivered on 22 March 2021, Mr Justice O’Donnell agreed with the Chief Justice’s judgment and added observations on how courts should assess whether security might prevent a company’s claim from proceeding.
The appeal concerned an application for security for costs, not a decision on the underlying claim. The Court agreed that Quinn Insurance had failed to establish, even on a prima facie basis, that its inability to pay costs was due to the wrongdoing it alleged against PwC. It also agreed that the Court of Appeal was right to treat the fact that the claim would not be stifled as a relevant and central consideration. The Supreme Court dismissed the appeal; O’Donnell J’s judgment does not state the amount of security or set out the full terms of the order under appeal.
O’Donnell J explained that security for costs involves balancing potential injustice to both sides. A company unable to meet a defendant’s costs may expose that defendant to unrecoverable expense if the claim fails. But an order may also prevent a plaintiff from pursuing a claim that could be justified. The possibility that a claim will not proceed is therefore relevant, though a company cannot defeat an application merely by asserting that security might stop it.
The judgment distinguished a company’s likely future inability to pay costs from present insolvency. It said courts may consider whether people or entities supporting a company’s claim are likely to benefit if it succeeds and whether funds may realistically be available to provide security, while keeping the company’s separate legal personality in view.
The judgment also endorsed careful scrutiny where a company says its financial position was caused by the defendant’s alleged wrongdoing. O’Donnell J said the Connaughton Road test did not require reconsideration and that this exception should be applied with caution. He agreed that Quinn Insurance had not connected its inability to meet a future costs order to the alleged wrongdoing, and that the prospect of the claim proceeding if security were ordered was central to the appeal.