Supreme Court grants leave to appeal on unclear distinction between evidence and required particulars in complex insurance litigation.

SUPREME COURT

79/2017

Clarke C.J.

O’Donnell J.

McKechnie J.

MacMenamin J.

Dunne J.

Charleton J.

O’Malley J.

BETWEEN/

Price Waterhouse Cooper (A Firm)

Appellant

AND

Quinn Insurance Limited (Under Administration)

Respondent

Judgment of O’Donnell J. delivered the 12th of December 2017.

1 The defendants in these proceedings (“PWC”) seek leave to appeal against one aspect of the decision of the Court of Appeal

delivered on the 21st of March 2017, in which that court reversed the decision of the High Court (Costello J) in which she directed

that the plaintiffs (“QIL”) provide full and better particulars which were repeated in identical form in respect of the underwriting years

2005, 2006, 2007, and 2008. The relevant particulars are those set out at paragraph 34 of the judgment of the Court of Appeal as

follows:

“In respect of the alleged understatement of each accident year within each class within each geographic region at 31

December 2005, please specify the reasons and the financial effect of each reason for the alleged understatement

identified by the plaintiff in its re-estimation of the plaintiff's technical provisions.”

This was replied to as follows:

“The plaintiff's case has been adequately pleaded. This is an inappropriate interrogation as to matters properly for

evidence, including expert evidence, at the trial of the action.”

PWC now seek to paraphrase that request in the following terms:

“What do you, QIL, say are the errors in your own estimates of the technical provisions, attested to by your own actuary

and approved by your own board?”

If this is an accurate paraphrase, then the reference to QIL’s own estimate, actuary and board can be removed and the particulars

requested can be reduced to “what do you, QIL, say are the errors in your … estimates of the technical provisions?” In the course of

argument the plaintiffs took issue with the accuracy of this paraphrase and that will in due course be an issue for the hearing, but

however phrased, it is clear that the issue raises in a relatively clear and concise way, and in substantial litigation where it can be

said that pursuit of such issues may be justified, a net issue, as to the entitlement to particularisation of a claim.

Background

2 The facts of this case have already been set out in detail in the judgment of the High Court and the Court of Appeal and it is not

necessary to repeat them here for the purposes of this application. It is sufficient to say that the plaintiff company, QIL, was a very

substantial insurance company in the household and motor insurance market. In 2010 the High Court appointed administrators to the

business. By the time of the Court of Appeal judgment, there was a deficit of €1.6 billion. The business of QIL has been sold by the

administrators (so that the remaining asset of the company is the entitlement to bring these proceedings).

3 The defendants, PWC, were the auditors of QIL during the relevant years. The technical provisions referred to in the request for

particulars are in substance the estimate made by an insurance company as to its future liabilities. This is required to be produced

with the assistance of actuarial advice. In this case QIL retained an international firm of actuaries Milliman’s to perform this function.

When the company went into administration the administrators retained the services of Mazars to carry out a review of the technical

provisions. Mazars concluded that on an overall basis the technical provisions had been understated in each of the relevant years,

with it is now alleged, a consequence that QIL engaged in certain transactions with associated businesses which it would not have

done, and failed to remedy its financial position when that was possible. In summary, it is said that QIL suffered up to €800 million of

damage. It is agreed that the proceedings are complex, and will be time consuming, and could run for more than a year. It is

suggested that discovery will run to tens of millions of documents.

4 The nub of the difference between the High Court and the Court of Appeal can be discerned from the following passages from the

judgment. At paragraph 43 of the High Court judgment, Costello J said:

“It can fairly be said that the pleadings set out the case to be advanced against the defendant in relation to its alleged

wrongdoing. However it is not clear from either the pleadings or the particulars furnished to date precisely what the

plaintiff says was wrong with the Technical Provisions as calculated by the plaintiff and Milliman in the Material Period. It

is common case that the plaintiff will first have to establish that these estimates were materially underestimated. In order

for the defendant fairly to meet this case, I am of the opinion that it needs particulars of why the plaintiff alleges the

Technical Provisions were in fact materially underestimated.”

This conclusion was the only aspect of the High Court judgment reversed by the Court of Appeal. At paragraph 38 of his judgment,

and having quoted the passage just cited, Hogan J in the Court of Appeal held:

“In my judgment, however, viewing the matter both from the standpoint both of practice and existing authority it would

be hard to see how requests of this kind could be accommodated within the ordinary parameters of a notice for

particulars. The pleader in a standard personal injuries action is not required, for example, to explain why the driver of the

motor vehicle which caused the crash was driving too fast or why he failed to keep a proper look-out immediately prior to

the accident. The gist of such a claim, after all, is that the defendant was in fact negligent by driving too quickly and by

failing to keep a proper look-out. While it is true that, as I have already noted, Baker J. observed in Playboy Enterprises

that the scope and range of admissible particulars in complex commercial litigation is naturally more extensive and broad-

ranging than in straightforward personal injury actions, the general principle to which I have adverted nonetheless holds

true.”

5 PWC now seeks leave to appeal to this Court from the determination of the Court of Appeal that such particulars were not required

to be ordered. An application for leave was made on the 24th of November 2016 and was responded to on the 7th of June 2017. The

Court directed an oral hearing of the application and further directed that written submissions be exchanged.

Decision

6 The 33rd Amendment to the Constitution inserted new provisions in the Constitution under which the appellate jurisdiction

previously exercised by the Supreme Court was transferred to the newly established Court of Appeal. Thus, Article 34.4.1 is in

identical terms to the previous provisions of that Article when dealing with the jurisdiction of the Supreme Court prior to the

amendment. Accordingly Article 34.4.1 now provides that the Court of Appeal shall have appellate jurisdiction from all decisions of the

High Court and such other decisions of other courts prescribed by law, and that no law may be enacted excepting from the appellate

jurisdiction of the Court of Appeal cases involving the validity of any law having regard to the provisions of the Constitution. It is also

provided by Article 34.4.3 that the decision of the Court of Appeal “shall be final and conclusive, save as otherwise provided by this

Article”. Article 34.5 then sets out the new jurisdiction of the Supreme Court which makes provision for those cases in which the

decision of the Court of Appeal is not final, and also those cases in which appeal from the High Court to the Supreme Court may be

permitted. For present purposes it is only necessary to consider the provisions of Article 34.5.3 dealing with appeals to the Supreme

Court from the Court of Appeal. It is provided as follows:

“The Supreme Court shall, subject to such regulations as may be prescribed by law, have appellate jurisdiction from a

decision of the Court of Appeal if the Supreme Court is satisfied that-

i the decision involves a matter of general public importance, or

ii in the interests of justice it is necessary that there be an appeal to the Supreme Court.”

7 There is a large measure of agreement between the parties as to the meaning and effect of these provisions. Both parties are

agreed that it is significant that the terms of Article 34.5.3 do not contain any reference to a “point of law” of general public

importance, and furthermore that the importance of the issue is described as of only “general” public importance rather than

exceptional, and in both these respects differs from the provisions of s 29 of the Courts Act 1924 (as amended) which permitted

appeal from the old Court of Criminal Appeal to the then Supreme Court. It is also agreed that the application involves an interlocutory

matter, and that the principles for the ordering of further particulars is now well known. However, the parties differ as to whether a

decision in this case raised any matter of general public importance or that it was otherwise in the interests of justice that there be

an appeal to the Supreme Court. It is convenient to deal with these matters in reverse order to that in which they appear in Article

34.5.3.

8 In relation to the criterion set out at 34.5.3 (ii), “the interests of justice”, the parties differed sharply as to their interpretation. On

behalf of PWC it was contended that these were broad words of general application. They were words of indeterminate reference

such as those often used in statutes or decisions like “fairness”, “reasonableness”, “non arbitrariness”, “clean hands” etc. It was

argued that it was not possible to logically deduce from such terms what they were intended to cover, and it was a matter for the

court in the light of their experience to interpret and apply the provisions. The relatively broad terms of the constitutional amendment

were contrasted with other possible limitations such as a decision which it was either “necessary” or “essential” in the interests of

justice that a case be appealed to the Supreme Court as for example provided for in New Zealand, or that it involved a “point of law”

of “exceptional” public importance, as in Section 29 of the Courts Act 1924 or in the case of the Privy Council, that criminal

conviction be shown to demonstrate “some grave violation of the principles of natural justice”. By contrast it was said that the

wording of the Irish Constitution was much more permissive. Accordingly, it was submitted that it was necessary simply for the court

to form an initial prima facie view as to the possibility of error in the court below, and that it was said, would satisfy the interests of

justice. While this might lead to much greater numbers of appeals than might have been anticipated, it was an inevitable consequence

of the broad language employed in the Article.

9 This interpretation advanced by PWC cannot however be accepted as correct. The structure of the constitutional amendment

clearly contemplates a system in which the default position is that all appeals will be determined finally by the decision of the Court of

Appeal and where appeal to the Supreme Court will be exceptional. If the Constitution was to be interpreted in the broad manner

contended for by PWC, then it seems almost pointless to require the court itself to grant leave for appeal since a court would in

reality be limited to a consideration of whether an appeal could be said to be unstatable. Furthermore, to afford an interpretation of

this breadth to Article 34.5.3 (ii) would have the effect of rendering Article 34.5.3 (i) redundant. The argument also erodes any

conceptual distinction between error and injustice. The fact that a court might make a decision which a further court might consider

to be an error, does not itself establish injustice. Indeed, if there were no limit to the appeals which could be taken, that in itself

might be considered an injustice. It is not necessary or possible at this stage to outline all the circumstances in which the court might

consider that leave should be granted in the interests of justice. However, it does appear that the category is best viewed as a

residual category, that is, if a decision does not involve a matter of general public importance, it may nevertheless still be contended

that it is in the interests of justice that it was necessary that there be an appeal to the Supreme Court. Some circumstances in

which this test may be satisfied have arisen, or can be suggested. First, a point may be made by way of cross-appeal, which itself

cannot amount to a matter of general public importance. Nevertheless it would be unjust to permit one party to appeal to the

Supreme Court and restrict another party from cross-appeal because the respondent’s appeal point was not itself of general public

importance. Similarly a point may be raised in a case which itself may not be of general public importance but which is necessary to

permit an appellant to argue, since otherwise determination of the issue of general public importance may not resolve the case. A

further example may be where the point the applicant seeks to advance relates to something which occurred for the first time in the

Court of Appeal. It might be said in such circumstances that the interests of justice would be served by permitting an appeal to the

Supreme Court even though the matter itself was not itself of general public importance. It would be foolish to attempt a conclusive

list of such factors in the abstract; it is in the nature of the interests of justice criterion that it is sufficiently flexible to respond to

the demands of the individual case. However the very fact that the applicants here rely solely on the alleged error of the decision of

the Court of Appeal demonstrates that no such issue arises in this case.

10 It is necessary accordingly to consider the first limb of the constitutional test, that is whether the appeal involves a matter of

general public importance. The Court has determined on a number of occasions that to satisfy this test it is necessary first that the

point be stateable, and second that it should normally have the capacity to be applicable to cases other than that under

consideration. It is possible that the subject matter of the case may itself be of public importance. These considerations are not

exhaustive.

11 The appeal here is from an interlocutory decision. The Constitution does not exclude interlocutory appeals from the jurisdiction of

the Supreme Court, or impose any restriction on them. Prima facie the same test is applied to such an appeal, as to an appeal after a

full hearing and appeal, that is, that the leave will be granted where it is established that the appeal involves a matter of law of

general public importance or it is otherwise in the interests of justice that an appeal should be heard. Some interlocutory appeals may

themselves raise classic issues of general public importance such as the appropriate test for the grant of an interlocutory injunction

which will be applicable in every application for such an injunction. Nevertheless, it will normally be the case that it would be more

difficult to establish that an interlocutory appeal contains an issue of general public importance or that the interests of justice are

otherwise engaged. This is because it is in the nature of interlocutory orders that they rarely set a course irrevocably and dictate the

outcome of the case. Appeals in interlocutory matters inevitably delay trial, and accordingly appellate courts are reluctant to interfere

with the management of a trial, preferring to see a trial concluded and if necessary appealed, unless it is clear that a distinct and

critical issue has arisen that requires to be addressed in advance of the trial. It is to be expected that it will be relatively rare that

this Court will consider that the constitutional threshold has been met in an interlocutory appeal. However as already observed

appeals in interlocutory matters are not excluded from the jurisdiction of the Court either expressly or by implication and in principle it

is possible to demonstrate that an interlocutory appeal meets the constitutional threshold. Furthermore, where an appeal seeks to

challenge the application of the High Court or Court of Appeal of well established principles of law which are not themselves the

subject of challenge, as this appeal does it will also be rare that this Court could be persuaded to grant leave to appeal. See, for

example, the Court’s determination in DPP v S [2017] IESCDET 134. On its face therefore this application faces significant hurdles.

12 However, this case presents an issue in a particularly clear way, given the scale of the litigation, and the engagement of the

parties. Although the case law on ordering further particulars is well known, the application of the principles set out in the case law

has led to diametrically opposed results on this issue between the High Court on the one hand and the Court of Appeal on the other.

Furthermore, while acknowledging the view advanced in the High Court case as to the necessity for more detailed particulars in

complex commercial litigation, the argument in the Court of Appeal ultimately appears to have resolved itself to the application of

principles in simple personal injuries actions. These matters suggest a degree of uncertainty as to the application of principles relating

to the delivering of further particulars. The distinction between matters which require to be pleaded in advance and those which are

matters of evidence may be easy to state, but as this case shows is more difficult to apply. A principle may be generally accepted

but stated at such a level of generality that the application of the principle in a particular type of case may itself be a matter of

general public importance The question of the degree of particularisation which is necessary, is one which affects all litigation, and is

therefore of general application . Also the decision in this case does not involve, as many decisions do, an area of discretion upon

which judges may reasonably differ: in theory at least there ought to be a clear distinction capable of being drawn between matters

of evidence and matters which have to be particularised. Furthermore this case involves particulars sought of something done or not

done by or on behalf of the Plaintiff rather than a particularisation of an allegation made by the Plaintiff in relation to the conduct of

the Defendant and a question may arise as to the proper application of the principle in that context. The Court considers therefore

that the proper application of the principles relating to the ordering of further particulars is a matter of general public importance and

that the outcome of this case may clarify the distinction between evidence and further required particularisation of proceedings.

Accordingly, the Court will grant leave to appeal on the grounds of appeal specified at paragraph 6(1) of the application for leave.

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relevant documents