Biomass Heating Solutions Ltd v Geurts International BV

JurisdictionIreland
JudgeMr. Justice Quinn
Judgment Date08 February 2023
Neutral Citation[2023] IEHC 66
CourtHigh Court
Docket NumberRecord No. 2019/ 4140 P
Between
Biomass Heating Solutions Limited
Plaintiff
and
Geurts International BV
Defendant

[2023] IEHC 66

Record No. 2019/ 4140 P

THE HIGH COURT

COMMERCIAL

Modular trial – Discovery – Supplemental affidavit – Defendant seeking an order directing that the proceedings be conducted by way of a modular trial – Whether the defendant should make further and better discovery of documents

Facts: The plaintiff, Biomass Heating Solutions Ltd, claimed that defects in the design and manufacture of products supplied by the defendant, Geurts International BV, caused serious failures when installed in units it supplied to its customers’ poultry farms in the UK and that this resulted in substantial losses to the plaintiff. The defendant said that it manufactured heat exchangers, but did not design “systems”. The defendant applied to the High Court for an order pursuant to O. 36, r. 9 of the Rules of the Superior Courts, O. 63A, r. 5 of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the court directing that the proceedings be conducted by way of a modular trial, in particular that the first module identify the applicable terms and conditions in respect of each of the twelve contracts the subject of the proceedings. The plaintiff applied for an order directing the defendant to make further and better discovery of documents falling within two of the categories set out in an order for discovery made on 16 February 2022, and in the alternative an order pursuant to O. 31, r. 21 of the Rules of the Superior Courts striking out the defendant’s defence and counterclaim for failure to make discovery.

Held by Quinn J that the result of the first module would inform the manner of preparation and conduct of the balance of the trial to such an extent that it was likely to facilitate a saving in time and cost for all parties and generate focus on the central issues in the case in a sequential manner. He held that any prejudice to the plaintiff by the deferment of the balance of the trial was mitigated by the fact that the issue for determination in the first module was an important one which required to be determined first, on any view of the case. He held that the pace of the proceedings and the history of the engagement of both parties was such that the plaintiff could not claim that the application and its timing was a mere delaying tactic by the defendant. He held that those factors were sufficiently strong to weigh the balance in favour of ordering a modular trial. He held that there would be an order directing a modular trial of the proceedings, and an order requiring the defendant to make a supplemental affidavit of discovery addressing the following: (a) the data sheets and calculations referred to in the exchange of emails on 31 March 2017 and 2 April 2017; (b) where not already discovered, documents recording original designs of which later modifications had been discovered; (c) the application of appropriate Dutch language search terms; (d) an explanation of the engagement with external consultants and any further documents arising therefrom; and (e) discovery of calculations on the “HTRI” programme in their original and native form. He held that before the order on the application was perfected he should hear the parties as it may be appropriate to refine the form of the module from that identified in the notice of motion.

Quinn J held that Category 1 of the discovery required to be made by the defendant concerned all documents recording and/or evidencing the terms on which the defendant supplied the contract products to the plaintiff; Category 3 required discovery of documents evidencing engagement between the parties in respect of the design and production of the products and matters relating to calculations, specifications and other matters. He noted that no application for further and better discovery was made in relation to Categories 1 or 3. From that he concluded that although there were certain matters outstanding in relation to discovery pursuant to the judgment, no discovery was outstanding which would affect the first module. Accordingly, he held that it would be possible to proceed with the hearing of that module on the date fixed for the hearing of the trial itself namely 16 May 2023.

Order for modular trial, a supplemental affidavit of discovery, and further discovery granted.

Judgment of Mr. Justice Quinn delivered the 8 th day of February 2023

(Modular trial and further discovery)
1

. This action is listed for hearing on 16 May 2023. This judgment relates to two pre-trial applications which were heard together.

2

. The defendant has applied for an order pursuant to O. 36, r. 9 of the Rules of the Superior Courts, O. 63 A, r. 5 of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the court directing that the proceedings be conducted by way of a modular trial, in particular that the first module identify the applicable terms and conditions in respect of each of the twelve contracts the subject of the proceedings.

3

. The plaintiff has applied for an order directing the defendant to make further and better discovery of documents falling within two of the categories set out in an order for discovery made on 16 February 2022, and in the alternative an order pursuant to O. 31, r. 21 of the Rules of the Superior Courts striking out the defendant's defence and counterclaim for failure to make discovery.

4

. The plaintiff is based in Co. Limerick and operates an agritech biomass fuel business which supplies patented units (“BHSL Units”) to farmers which convert untreated poultry manure to energy. It sources heat exchangers from the defendant

5

. The defendant is based at Leiden in the Netherlands. It manufactures heat exchangers which transfer heat from one substance to another

6

. The plaintiff claims that defects in the design and manufacture of the products supplied by the defendant caused serious failures when installed in units it supplied to its customers' poultry farms in the UK and that this resulted in substantial losses to the plaintiff. The defendant says that it manufactures heat exchangers, but does not design “systems”.

The case as pleaded
7

. In its statement of claim the plaintiff recites that the parties had been in contact since 2010 about the possibility of the defendants supplying the plaintiff with heat exchange systems for incorporation into its units. The plaintiff alleges that it was at all times agreed that the defendant would be solely responsible for the design of the heat exchange systems and that the defendant represented that it had the capacity and skill to do so.

8

. The heat exchangers produced by the defendant were incorporated into BHSL Units, which were intended to operate by converting the heat generated from the burning of poultry manure into heat in the form of hot water or steam used to provide heating at the poultry farms and to produce electricity.

9

. The plaintiff says that it identified to the defendant its specific requirements as to such matters as temperature and rate of flow of the air in the systems and as to the temperature and pressure required to be achieved. It says that the defendant at all times represented to it that it had specialist knowledge and expertise in the design and manufacture of heat exchange systems and that the plaintiff relied on the defendant having such specialist knowledge and expertise.

10

. In paragraph 8 the plaintiff pleads that the following were “the express and/or implied terms of the agreement” and that the defendant warranted the following:-

  • (i) That it had the necessary skill to design and manufacture the heat exchange systems to the plaintiff's specifications;

  • (ii) That the defendant would exercise all reasonable care, skill and diligence in designing and manufacture of the heat exchange systems;

  • (iii) All materials and components used by the defendant would be as per the design specification;

  • (iv) That the heat exchange system supplied by the Plaintiff would be certified by Lloyd's Register as being in compliance with the requirements of the Pressure Equipment Directive;

  • (v) That the defendant would ensure that the design and manufacture of the systems would conform to the plaintiff's requirements;

  • (vi) That in the event of any change of design or variation being necessary in respect of the heat exchange systems, such design or variation would be a suitable response to the contract requirements;

  • (vii) That the heat exchange systems would be fit for purpose; (viii) That any additional terms in the plaintiff's purchase orders would be express terms of the agreement between the parties;

  • (ix) That the goods and services supplied would comply with the terms of the Sale of Goods and Supply of Services Act 1893 to 1980.

11

. In its Reply to the Defence the Plaintiff pleads that it was agreed “and/ or understood” by the parties that the law applicable to the contract was the law of Ireland.

12

. The plaintiff pleads in the alternative that the defendant owed to the plaintiff:-

  • (i) A duty of care to exercise due skill, care and diligence in designing and manufacturing the heat exchange systems;

  • (ii) Other duties of care consistent with the express and/or implied contractual terms and conditions and/or representations and warranties.

13

. The units which gave rise to these proceedings were the subject of three separate orders.

14

. On 6 November 2015, the plaintiff ordered a system which was incorporated in BHSL Unit 14 supplied by the plaintiff to Uphouse Farm, Norfolk, England.

15

. On 8 June 2016, the plaintiff ordered two systems. One was installed in BHSL Unit 15 supplied by the plaintiff to Ridby Court Poultry Farm, Hertfordshire, England, The second system was intended to be used in BHSL Unit 12 but was used for spare parts after issues arose in the...

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