Defender Ltd v HSBC Institutional Trust Services (Ireland) Ltd

JurisdictionIreland
JudgeMr. Justice Twomey
Judgment Date15 October 2018
Neutral Citation[2018] IEHC 587
CourtHigh Court
Docket Number[2013 No. 12439P],[2013 No. 12439 P]
Date15 October 2018

[2018] IEHC 587

THE HIGH COURT

COMMERCIAL COURT

Twomey J.

[2013 No. 12439P]

BETWEEN:
DEFENDER LIMITED
PLAINTIFF
-AND-
HSBC INSTITUTIONAL TRUST SERVICES (IRELAND) LIMITED
DEFENDANT
-AND-
RELIANCE MANAGEMENT (BVI) LIMITED
RELIANCE INTERNALTIONAL RESEARCH LLC, FIMAN LIMITED

AND

DAVID WHITEHEAD
THIRD PARTIES

Discovery – Privilege – Witness statements – Plaintiff seeking discovery – Whether a witness statement loses privilege when it is served on the opposing party or when it is adopted by a witness in open court

Facts: The plaintiff, Defender Ltd, sued the defendant, HSBC Institutional Trust Services (Ireland) Ltd, for its alleged negligence in relation to its alleged role as a custodian of funds on its behalf. There were other proceedings in which HSBC was sued by an unrelated party, Thema International Fund plc, in similar circumstances. Those proceedings settled, but some of the HSBC witnesses who were due to give evidence in the Thema proceedings were due to give evidence in the Defender proceedings. Defender sought the HSBC witness statements and expert reports from the previous proceedings against HSBC in order, inter alia, to see if there were inconsistencies between the statements of HSBC witnesses in the Defender case compared with the statements of those same witnesses in the Thema case. At issue was whether the previous witness statements which were served on Thema but not adopted by the witnesses as their evidence in court, because the case settled, were privileged so as not to be available on discovery to Defender in these proceedings. In addition, there was an application for discovery regarding another set of prior proceedings, the Primeo Fund case, which did not raise the foregoing privilege issue since those witness statements were adopted by the relevant witnesses in open court.

Held by the High Court (Twomey J) that the witness statements in the Primeo case, which lost privilege during the course of that trial by their adoption by the relevant witnesses, should be made available on discovery to Defender, and the delay, absence of necessity or absence of relevance for refusing discovery put forward by HSBC were rejected by the Court.

Twomey J held that, regarding the witness statements in the Thema case, they were privileged and did not lose privilege when they were served by HSBC on the opposing side to that litigation, which privilege was not lost on the completion of the Thema case, because it was closely connected to the Defender case, and so those documents should not be made available on discovery to Defender. Twomey J held that an exception was the witness statement of Ms Coe which, although not adopted by her, was opened in part in court and the effect of some its contents were summarised in open court. Twomey J held that this witness statement should be provided on discovery to Defender, as well as the witness statement of Mr Wiener.

Application granted in part.

EX TEMPORE JUDGMENT of Mr. Justice Twomey delivered on the 15th October, 2018.
Summary
1

This is an application for discovery which involves an issue, which counsel have advised has not been considered previously in the Irish courts: does a witness statement lose privilege when it is served on the opposing party or when it is adopted by a witness in open court? For the reasons set out below, this Court concludes that the witness statement remains privileged after it is served on the opposing party.

2

The background to the application is that Defender is suing HSBC for its alleged negligence in relation to its alleged role as a custodian of funds on its behalf. There are other proceedings in which HSBC was sued by an unrelated party (Thema) in similar circumstances. Those proceedings settled, but some of the HSBC witnesses who were due to give evidence in the Thema proceedings are due to give evidence in these, the Defender proceedings. The issue which has to be resolved is:

whether HSBC witness statements from previous proceedings against HSBC which were served on Thema, but not adopted by the witnesses as their evidence in court (because the case settled), are privileged, so as not to be available on discovery to Defender in these proceedings?

3

Defender seeks the previous witness statements (and expert reports, collectively referred to as "witness statements") in order, inter alia, to see if there are inconsistencies between the statements of HSBC witnesses in the present proceedings the 'Defender Case') compared with the statements of those same witnesses in the prior settled proceedings against HSBC ( Thema International Fund plc v. HSBC Institutional Trust Services (Ireland) Ltd (the 'Thema Case')).

4

It is common case that if the witness statements had been adopted in open court by the witnesses in the Thema Case, then privilege would have been lost and there would be no objection to their being discovered, unless the Thema proceedings are closely connected with these Defender proceedings.

5

Although this issue of whether privilege is lost on the service of witness statements does not appear to have been considered by the Irish courts, it is necessary to deliver an ex tempore judgment on the issue, as the 20 week trial in these proceedings is due to begin on 30th October, 2018. This is particularly so, because of the possibility of an appeal and also because HSBC has indicated to the Court that if this discovery motion is successful, it will look for witness statements from inter alia, those experts retained by Defender for these proceedings, who provided evidence in the Thema Case.

6

The substantive claim in these proceedings is for some $333 million by Defender against HSBC for, inter alia, negligence and breach of contract regarding HSBC's alleged role as a custodian of funds which were lost because of the fraud of its alleged sub-custodian, Bernie L. Madoff Securities LLC ('BLMIS'), whose principal, Mr. Bernie Madoff was involved in a €65 billion Ponzi scheme in the United States.

The discovery applications
7

The application for discovery regarding the Thema Case seeks the following documents:

• The witness statements of Ms Christine Coe, Mr Ronnie Griffin, and the expert reports of Ms Bronwyn Wright, Mr Travis A Taylor, Mr Charles Tabb, Mr Giles Murphy, Mr Jack R Wiener and Mr Ian Hunt, delivered by the Defendant in proceedings titled Thema International Fund plc v. HSBC Institutional Trust Services (Ireland) Ltd and bearing the record no. 2008/ 10983P.

In addition, there is an application for discovery regarding another set of prior proceedings, which does not raise the foregoing privilege issue since those witness statements were adopted by the relevant witnesses in open court, but it raises other issues. This discovery seeks:

• The witness statement of Ms Christine Coe and the expert reports of Mr Jack R. Wiener and Mr Gilbert Schwartz in proceedings titled Primeo Fund (in Official Liquidation) v. Bank of Bermuda (Cayman Ltd) and HSBC Securities Services (Luxembourg) SA (the ' Primeo Case') bearing cause number FSD 30 of 2103

8

While the defendant in the Thema Case is the same defendant as in this case, the defendant in the Primeo Case (HSBC Securities Services (Luxembourg) SA) is not the same defendant as the defendant in this case (HSBC Institutional Trust Services (Ireland) Ltd), they are both members of the HSBC group of companies.

9

Both the Thema Case and the Primeo Case are now at an end. The Thema Case was settled after 17 days of hearings before Charleton J. in the High Court. Judgment was delivered by the Cayman Island High Court in the Primeo Case on the 23rd August 2017.

10

In addition to the privilege issue, HSBC objects to the discovery of the Thema Case witness statements and the Primeo Case witness statements, on the grounds of what it sees as the inexcusable delay of Defender in seeking this discovery. HSBC also disputes the necessity for the discovery of these documents.

11

In relation to the Thema Case witness statements, which are alleged by HSBC to be privileged, Defender claims that even if they are privileged, once the proceedings concluded, those witness statements should be available on discovery, because the Thema Case proceedings are not closely connected with these the Defender proceedings, such as to justify the continuation of the privilege.

Primeo witness statements and Thema witness statements
12

In relation to the Primeo witness statements, HSBC objects to their discovery because this application is being made well outside the time limit for the making of such applications under Order 31, rule 12(9) of the RSC. Under that rule applications for an extension of the time for discovery should have been made within 28 days of the date that this matter was set down for trial, which would mean the latest date for such applications was the 4th December 2017.

13

In this regard, it is relevant to note that it was not until the 12th July 2018 that Defender sought discovery from HSBC of the Thema witness statements and the Primeo witness statements.

14

However, the rule in Order 31, rule 12(9) is subject to the important proviso that the Court may agree to extend this time limit where it appears just and reasonable to do so, which is considered hereunder. First however, the issue of the relevance and necessity of the witness statements will be considered.

Relevance and necessity
15

In defending the application for discovery, counsel for HSBC did not raise any objection to the relevance of the Primeo witness statements or indeed the Thema witness statements. In any case, this appears to be clearly a case where the witness statements are relevant since as noted by Charleton J. in an earlier application for discovery in this case, of the transcripts of the Thema Case, he held (at page 94 of the transcript of the judgment of 18th June 2014 Defender Limited v HSBC Institutional Trust Services (Ireland)...

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1 firm's commentaries
  • Legal Privilege Update: Part 2 Of 3
    • Ireland
    • Mondaq Ireland
    • 20 February 2019
    ...Privilege and witness statements The question considered in Defender Limited v. HSBC Institutional Trust Services (Ireland) Limited [2018] IEHC 587 was whether a witness statement loses privilege when it is served on the opposing party or whether it remains privileged until it is adopted by......

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