Quinn Insurance Ltd has settled a potential record-breaking €900 million lawsuit against its former auditors PwC, for tens of millions of euro.
The insolvent insurer, overseen by administrators Michael McAteer and Paul McCann of Grant Thornton, sued the accountants’ firm for €900 million for negligent auditing of its business, which collapsed in 2010.
Lawyers for both sides confirmed to the High Court on Wednesday that the sides have settled the case. They did not reveal the terms, but it is understood that PwC agreed to pay tens of millions of euro, ending the litigation.
The administrators will pay this cash to the Insurance Compensation Fund (ICF) which covered claims made against policies issued by Quinn following its insolvency.
The Central Bank supervises the ICF while the High Court determines the amounts that should be paid from it to allow the administrators to do their work.
Settling the PwC case brings the administrators a step closer to finalising a process begun when the State’s financial regulator appointed them in March 2010.
A number of investments originally held by Quinn subsidiaries are due to mature over the next few years. Any proceeds from these will also go to the ICF.
Quinn sued PwC for negligent auditing of the insurance underwriter between 2005 and 2008, and breach of contract and duty.
PwC denied this, claiming that any losses incurred by the failed insurer were due to its continued trading, and decisions taken by the underwriting firm and/or the administrators’ actions.
The Seán Quinn-controlled Quinn Insurance had an underwriting business of €1 billion. Its losses were met by a 2 per cent levy on all non-life insurance policies in the State. The legal action, which arose from its being placed in administration in June 2010, was one of the largest damages claims in the Republic’s history.
A key feature of the pretrial process was whether the administrators, Mr McAteer and Mr McCann, should be required to provide security of PwC’s legal costs, which would be used in the event that Quinn lost the case.
In June 2021 the Supreme Court ruled Quinn would have to pay security for PWC’s multimillion-euro legal costs for defending the action. Last December the Commercial Court was told the parties had agreed the total sum for cost security should be just over €29.5 million.
Quinn Insurance and PwC would have run up legal bills totalling close to €60 million to fight the action had it gone ahead in the High Court, legal sources calculate. The case itself was unlikely to have begun for two to three years.
Sources say the losing side would have gone to the Court of Appeal and then the Supreme Court, adding several years more to the case and millions of euro to the cost.
They also point out that courts were unlikely to have awarded Quinn the full €900 million it sought from PwC had it won, as judges would take Quinn’s own contribution to its collapse into account when deciding damages, so the insurer would have emerged with a fraction of those damages.
Mr Justice Denis McDonald, who heads the Commercial Court list, congratulated the lawyers for finding a resolution in the “complex, lengthy and difficult” proceedings. The costs to those involved, were the case to proceed, would have been “absolutely phenomenal”, he said, while they also would have consumed a significant amount of court time.
Declan McGrath SC, for Quinn Insurance Ltd, asked that the parties would have liberty to mention the matter after the settlement has been implemented. The court heard PwC was consenting to the agreement.
The judge made an order vacating a discovery hearing that had been scheduled for next month and adjourned the case generally. He gave liberty for it to be mentioned following implementation of the agreement.