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Court of Appeal allows appeal from High Court, and grants order directing that an insurance group in administration provide security for costs in its claim against its former auditors for negligence and breach of contract, on the grounds that: (a) while there was a causal connection between the alleged wrongdoing and the losses suffered by the insurance group, it did not account for the full amount of the insolvency and there was an estimated shortfall of €200 million; (b) the estimated costs to be incurred by the former auditors in defending the case amounted to €30 million; (c) if the security were granted, it would not 'stifle' the claim, in that the insurance group had financial backing for its own costs; and (d) there was not such a public interest in the litigation as to warrant a departure from the requirement that security for costs be provided.
Baker J (nem diss): Insurance group in administration - insolvent - claim against auditors of group - 2012 summons - breach of contract and negligence - Commercial Court - very large and very complex action - 40 million documents - case management - pleadings closed - particulars answered - cost of defending proceedings estimated at €30 million - security for costs - refusal by High Court to order security for costs - whether exceptional circumstances to justify refusal - Section52 of the Companies Act - whether inability to discharge costs arose from alleged wrongdoing of auditors - whether issues of general public interest and exceptional public importance - analysis of losses suffered by insurance group - causative connection - Insurance Compensation Fund (ICF) - credibility of causative connection - whether group would be able to discharge a costs order even if successful in litigation - whether order for security would 'stifle' a genuine claim - role of costs in the administration of justice - financial backing for plaintiff - exceptional public importance.
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