Solicitors in Cork, Munster

Anyone who has been involved in a court case in which discovery of certain documents has been ordered will be aware that it is often a major strategic pressure point in the case. The sheer volume of documents which need to be identified and produced can be both time consuming and costly. Anyone involved in undertaking the discovery of documents needs to be aware of the serious consequences for failing to make proper discovery in terms of costs, reputations of those involved and most importantly the ultimate prospects of the case.

The test to ascertain if discovery should be ordered was explored by Justice Laffoy in a judgment delivered on 13th December 2013 in the case of Kinsella v Wallace, Monaghan and Bank of Scotland Plc

The Plaintiffs made an application for an order that the Bank and Receivers make discovery on oath of certain categories of documents.

The Plaintiffs had made a complaint in July 2012 to the Financial Services Ombudsman (‘the FSO’) regarding the manner in which they had been treated as consumers by the Bank.
The Plaintiff’s complaint related to three separate issues;

1. That the Bank had resiled form an agreement made to the Plaintiffs in 2005 regarding a development, being carried out by the Plaintiffs, known as Southpoint to the effect that the Bank, being aware that the development would generate a shortfall of €7.6million, would finance that sum over a 20 year principal reducing loan which would be secured and serviced from the rental income generated by the development at Southpoint.

2. There was a complaint that after work on the Southpoint development commenced in 2006 the Bank demanded additional security from the Plaintiffs being either €3million in cash or security over properties owned by the Plaintiffs outside of the Southpoint development known as ‘non-core properties’. The Plaintiffs stated that the additional security was not supposed to be long-term but was instead to be released when the development reached a certain height. The Plaintiffs argued that although the Southpoint development had been completed the ‘non-core properties’ had not been released as security by the Bank and Receivers were appointed to the ‘non-core properties’ in February 2013.

3. There was a complaint that the Bank had promised to support the Plaintiffs and had agreed to hold off reducing prices and selling apartments in Southpoint and to wait out the market and to rent out the properties and that the Bank should adhere to that agreement and is estopped from reverting to its contractual right to appoint Receivers under the loan documentation.

The Plaintiffs sought discovery of documents surrounding these claims.

The Plaintiffs also said that in order to have things put right they wanted the Bank not to be permitted to resile from the agreement in relation to the financing of the €7.6million shortfall over a 20 year period, they wanted the Bank not to be permitted to resile from the agreement to hand back the ‘non-core assets’ and they wanted the Bank to be estopped from reverting to alleged contractual rights to appoint Receivers. The Plaintiffs also believed that they should be compensated by way of a sum of money for the losses suffered.

The Defendants argued that the Receivers, who had been appointed over the assets of certain plaintiffs who are corporate bodies, had not authorised the institution or maintenance of the proceedings by the Plaintiffs and the proceedings, which sought to interfere with the performance by the Receivers of their functions with regard to assets over which they have been appointed, are not maintainable by those Plaintiffs.

The Defendants further argued that the reasons put forward as to why discovery was relevant and necessary were not articulated. The Defendants argued, inter alia, that it is not appropriate for the Plaintiffs to seek to litigate the matters before the High Court while they are before the FSO and discovery of the documents was unnecessary for the Plaintiffs case as pleaded.

The Court noted that its task was to determine whether the documents sought to be discovered were relevant to the issues in the proceedings and, if so, if discovery is necessary for disposing fairly of the matter or for saving costs.

Justice Laffoy held that the question which the Court had to determine is whether the relevance of the documents sought to be discovered has been demonstrated by the Plaintiffs by reference to the issues raised in the pleadings.

Justice Laffoy advised that, in a nutshell, the wrongdoing alleged by the Plaintiffs is alleged against the Bank and it is that the Bank interfered and continues to interfere with the Plaintiffs statutory right to make the complaint to the FSO, to have it adjudicated on and to obtain an effective remedy, if the complaint was or is substantiated.

The Defendants have admitted that the complaint was made but they have not admitted the basis of the complaint as pleaded by the Plaintiffs and they have denied the wrongdoing alleged against the Bank by the Plaintiffs.

It was decided that the documents relating to the elements of the complaint of which the Plaintiffs had sought discovery, as a matter of probability, would enable the Plaintiffs either to advance their own case or to damage the Defendants case and she was satisfied that the documents sought by the Plaintiffs were relevant to the issues in the proceedings.

Justice Laffoy then went on to consider whether discovery of the documents sought was necessary for disposing fairly of the matter. She referred to earlier High Court decisions and noted that the test is whether one party enjoys an unfair advantage or suffers an unfair disadvantage in the litigation as a result of a document not being produced for inspection and that the Court had to reach a conclusion as to the likely effect of the grant or refusal of the discovery on the fair disposal of the litigation.

It was decided that the Defendants would unquestionably enjoy an unfair advantage and the Plaintiffs would suffer an unfair disadvantage if the Court’s determination was to refuse discovery of the documents on which, as a matter of probability, the proper meaning and effect of the complaint can be ascertained.

An Order of discovery was therefore made against the Defendants.

It should be noted that there were also issues raised regarding a Data Protection Request made by the Plaintiffs. Justice Laffoy stated that the argument made by the Defendants that the Plaintiffs did not need discovery because they had received documentation from an alternative source had no merit. The Court refused to comment on the Plaintiffs complaint that the documents they received from the Data Protection Request were in a disorganised state without any index in 5 plastic bags, that many were not stapled and had become mixed up and that it was impossible to put order on the documents.

It is important for all parties to legal proceedings to be aware of their obligations if an order for discovery has been made against them and to be aware of the obligation to disclose all documents relevant to the issues in dispute. Preparation for discovery should commence at the earliest possible stage and it is very important that parties seek the necessary legal advice to assist in identifying relevant material and to assist in determining which documents are protected by privilege.

We have received numerous queries form our banking clients regarding the issue of privilege. It is important to remember that when deciding which documents are relevant and must be disclosed each document must also be assessed to consider whether it is appropriate to assert privilege.

There are two types of privilege, being, legal professional privilege and litigation privilege. Often clients don’t understand the issue of privilege and end up handing over documents via a data access request that are privileged.
Data access requests should ideally be supervised before any documents are released to a client which could potentially lead to litigation and it is important that copies of the released documents, both clean and redacted, should be kept.

Breda Sheahan is a trainee solicitor in the Commercial Department of FitzGerald Solicitors. FitzGerald Solicitors are one of Munster’s leading Commercial Law Firms and are located at 6 Lapps Quay, Cork.


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