Daly v Ardstone Capital Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 30 April 2020
• Neutral Citation: [2020] IEHC 200
• Docket Number: Record Number: 2016/7316P
• Court: High Court
• Date: 30 April 2020

BETWEEN/

JOHN DALY

PLAINTIFF

- AND -

ARDSTONE CAPITAL LIMITED

DEFENDANT

[2020] IEHC 200

MURRAY J.

Record Number: 2016/7316P

THE HIGH COURT

Declaratory relief – Damages – Discovery – Plaintiff seeking further and better discovery – Whether the defendant’s discovery remained deficient

Facts: The plaintiff, Mr Daly, was a former employee of the defendant, Ardstone Capital Ltd. He claimed that he was entitled to a 10% share of the defendant’s profit in a commercial investment fund known as the Added Value Fund (AVP). The AVP was established by the defendant in December 2013. It involved seven large commercial properties in Dublin which were to be acquired, improved and sold on at a profit. The plaintiff said that the defendant would typically receive 20% of any profits of the AVP generated over a 10% internal rate of return threshold, the remaining 80% being returned to investors in the AVP. Both parties referred to the defendant’s share of the AVP profits as ‘the Promote’. The plaintiff sought declaratory relief as to his ownership of the profit share, orders directing payment of that share, and damages for breach of contract, breach of duty, and misrepresentation. The defendant denied that there was any agreement to grant the plaintiff the interest in the Promote claimed by him. It claimed that while an employee of the defendant the plaintiff unlawfully took information of and concerning the defendant’s business. The defendant counterclaimed for relief against the plaintiff arising from this allegation. By Order of 15 March 2018, Stewart J directed that the defendant make discovery. Some of the categories of documents to be so discovered had been agreed between the parties. Stewart J resolved a dispute between the parties as to the remaining categories. Her order referred, in general, to the agreed categories and then specified what was to be discovered under four disputed categories. She required that the defendant make discovery of documents falling within those categories within eight weeks of the making of the order. An affidavit of discovery on behalf of the defendant was sworn on 27 July 2018 by Mr Mulcahy. The plaintiff’s solicitors issued their first correspondence complaining of inadequacies in the defendant’s discovery on 18 January 2019. In the course of the ensuing exchanges between the solicitors for the respective parties, the defendant delivered two supplemental affidavits of discovery on 27 February 2019 and 14 June 2019. The plaintiff contended that the defendant’s discovery remained deficient and applied to the High Court seeking further and better discovery consequent upon that alleged default.

Held by Murray J that he would make the following orders: (i) an order that the defendant make further and better discovery of the spreadsheet appearing as exhibit CQ 3 to the affidavit of Mr Quigley sworn on the 4 July 2019, together with the e-mail with which that spreadsheet was sent to the defendant; (ii) an order that the defendant make further and better discovery of any documents in addition to that specified at (i) relating to any entitlement or promise of the kind alleged by the plaintiff; (iii) an order that the defendant make further and better discovery of all residential investment presentations issued that included the plaintiff’s profile; (iv) an order requiring the defendant to swear an affidavit which addresses (a) the exact date on which the plaintiff’s e-mail account was shut down and the plaintiff’s e-mails were deleted, (b) the date on which the defendant began a retrieval process in relation to the emails, (c) the identity of the person or persons engaged to retrieve those emails, and how that task was undertaken, (d) how many emails were successfully retrieved and how many were not, and (e) the nature of the emails which were not successfully retrieved including how they relate to the categories of discovery ordered by the Court on 25 May 2018. Murray J directed that the affidavit identified above be sworn within eight weeks of the date of this judgment, subject to the defendant having liberty to apply in respect of that time period.

Murray J held that all other aspects of the plaintiff’s application for further and better discovery would be refused.

Application granted in part.

JUDGMENT of Mr. Justice Murray delivered on the 30th day of April 2020

Background:

1 The plaintiff is a former employee of the defendant. In these proceedings he claims that he is entitled to a 10% share of the defendant's profit in a commercial investment fund known as the Added Value Fund (‘AVP’). The AVP was established by the defendant in December 2013. It involved seven large commercial properties in Dublin which were to be acquired, improved and sold on at a profit. The plaintiff says that the defendant would typically receive 20% of any profits of the AVP generated over a 10% internal rate of return threshold, the remaining 80% being returned to investors in the AVP. Both parties refer to the defendant's share of the AVP profits as ‘the Promote’.

2 The plaintiff commenced employment with the defendant in September 2013. He pleads that in the course of the interview process preceding his appointment he was offered a 5% entitlement to the Promote. He says that this was to be earned at the determination of the AVP, that in turn occurring upon disposal of its last asset.

3 It is the plaintiff's case that during and following a lunch meeting in July 2015 the defendant agreed to increase the share of the Promote to which the plaintiff was entitled, to 10%. On 8 July 2016 the plaintiff's employment was terminated. He says that this termination was unlawful. He claims that the termination was effected by means of a ‘sham redundancy’ and that this was done with a view to denying him his entitlement to his 10% share of the Promote. He seeks declaratory relief as to his ownership of the profit share, orders directing payment of that share, and damages for breach of contract, breach of duty, and misrepresentation.

4 The defendant denies that there was any agreement to grant the plaintiff the interest in the Promote claimed by him. It says that in September 2013 the plaintiff was offered a short-term role with the defendant, that the AVP did not exist at that time, and that no representations or assurances of any kind were made to him. It says that in July 2015 the plaintiff expressed his dissatisfaction with an increase in salary then offered to him and that he sought 10% of the Promote, not on the basis of any alleged prior representation but because he felt he deserved this. It claims that while an employee of the defendant the plaintiff unlawfully took information of and concerning the defendant's business. The defendant has counterclaimed for relief against the plaintiff arising from this allegation.

5 By Order of 15 March 2018 Stewart J. directed that the defendant make discovery. Some of the categories of documents to be so discovered had been agreed between the parties. Stewart J. resolved a dispute between the parties as to the remaining categories. Her order refers, in general, to the agreed categories and then specifies what is to be discovered under four disputed categories. She required that the defendant make discovery of documents falling within those categories within eight weeks of the making of the order. An affidavit of discovery on behalf of the defendant was sworn on 27 July 2018 by Donal Mulcahy.

6 The plaintiff's solicitors issued their first correspondence complaining of inadequacies in the defendant's discovery on 18 January 2019. In the course of the ensuing exchanges between the solicitors for the respective parties, the defendant delivered two supplemental affidavits of discovery – on 27 February 2019 and 14 June 2019. The plaintiff contends that the defendant's discovery remains deficient and has brought this application seeking further and better discovery consequent upon that alleged default.

Relevant legal principles.

7 This application brings into focus a number of distinct issues that can present themselves where discovery has been made on foot of an agreement between the parties and/or a court order and the party in whose favour that discovery is made contends that there are other documents which they believe should be discovered. That issue can present itself because the party says that there are documents that fall within the categories that ought to have been discovered but were not, and it can arise where the party says that there are documents which are not within the agreed or directed categories but which they believe are relevant and which they say should now be discovered. Sometimes, either or both of these issues can present themselves where there is a dispute as to what the agreed or directed category actually means. While these issues frequently present themselves before the courts, in this case it seemed to me to be important to separate and define them. In so doing, I was greatly assisted by the helpful oral and written submissions of Ms. Clare Hogan (for the plaintiff) and Ms. Mary Paula Guinness (for the defendant). Following a consideration of the authorities referred to by them, the principles seem to me to be as follows.

8 First, further and better discovery will only be directed where it has been shown that there are documents which the party that has made discovery was required to discover but has not discovered and/or that the person making the affidavit of discovery has misunderstood the issues in the action and/or that his view as to whether documents are outside his discovery obligation was wrong. ( Sterling Winthorp Group Limited v. Farben Fabriken Bayer AG [1967] IR 97 at pp.100, 103 and 105). While the older cases described this inquiry by reference to whether the person making the affidavit of discovery has in his possession or power relevant documents, with the introduction in...