Hartside Ltd v Heineken Ireland Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 15 January 2010
• Neutral Citation: [2010] IEHC 3
• Court: High Court
• Date: 15 January 2010

Hartside Ltd v Heineken Ireland Ltd

COMMERCIAL

BETWEEN

HARTSIDE LIMITED

PLAINTIFF

AND

HEINEKEN IRELAND LIMITED

DEFENDANT

[2010] IEHC 3

[No. 6582 P/2009]

THE HIGH COURT

PRACTICE AND PROCEDURE

Discovery

Relevance - Necessity - Breach of contract - Whether documents necessary to dispose fairly of cause - Confidential documentation - Test of proportionality applied in making order for discovery of confidential documents - Whether discovery of documents proportionate - Hannon v Commissioner for Public Works (Unrep, McCracken J, 4/4/2001); Framus Ltd v CRH Plc [2004] 2 IR 20; Independent Newspapers v Murphy [2006] IEHC 276 [2006] 3 IR 566 followed - National Education Welfare Board v Ryan [2007] IEHC 428 [2008] 2 IR 816; Moorview Developments Ltd v First Active [2008] IEHC 211 [2009] 2 IR 788 considered - Order for discovery of some documents (2009/6582P - Clarke J - 15/1/2010) [2010] IEHC 3

Hartside Ltd v Heineken Ireland Ltd

HANNON v COMMISSONER FOR PUBLIC WORKS UNREP MCCRACKEN 4.4.2001 2001/11/3168 2001 IEHC 59

FRAMUS LTD v CRH PLC 2004 2 IR 20

INDEPENDENT NEWSPAPERS v MURPHY 2006 3 IR 566

NATIONAL EDUCATION BOARD v RYAN & ORS 2008 2 IR 816

MOORVIEW DEV LTD v FIRST ACTIVE PLC UNREP CLARK 20.5.2008 2008 IEHC 211

RYANAIR v BRAVOFLY UNREP CLARKE 29.1.2009 2009 IEHC 41

1. Introduction

2 1.1 In these proceedings the plaintiff company ("Hartside") sues the defendant ("Heineken Ireland") arising out of what is said to have been a breach by Heineken Ireland of the terms of a joint venture agreement entered into in 1996. It is unnecessary, for the purposes of the issue which I now have to decide, to set out in detail either the terms of that joint venture agreement or the disputes which have arisen between the parties, save to say that amongst the allegations contained in the statement of claim filed on behalf of Hartside is a contention that Heineken Ireland is in breach of the joint venture agreement concerned insofar as that agreement relates to the terms on which certain products are to be supplied by Heineken Ireland to the joint venture. It will be necessary to refer to the relevant provisions of the pleadings and the joint venture agreement in due course.

3 1.2 In the context of seeking discovery, a range of categories of documents were sought by both parties. As a result of constructive correspondence in both directions, all bar one of the relevant categories of discovery have been agreed between the parties with or without appropriate modifications. One issue of discovery, however, remains in dispute and this judgment is directed towards that issue. In order to understand the issue which has arisen it is necessary to turn, briefly, to those aspects of the pleadings which deal with the claim in respect of which the opposed category of discovery is sought. I, therefore, turn to the pleadings.

2. The Pleadings

2 2.1 At para. 20 of the statement of claim Hartside makes a range of allegations as to breach of contract. In general terms it is asserted that Heineken Ireland has failed to fulfil its duties and obligations under the relevant joint venture agreement. In particular, it is asserted at subpara. (h) that Heineken Ireland "has been supplying its Heineken products to the company on less favourable terms than to other parties who are purchasing comparable volumes, in breach of the provisions of Clause 9.3.1 and Clause 2.1.1. of the JVA". In that context the "company" is the vehicle through which the joint venture agreement operates and the JVA is the joint venture agreement. Heineken Ireland sought particulars of the products referred to in para. 20(h) and details of the less favourable terms referred to, together with the identity of the other parties allegedly involved.

3 2.2 The reply to that item in the particulars sought was as follows:-

"This is a matter within the knowledge of the defendant. The plaintiff is aware that the defendant has been supplying its Heineken products on less favourable terms to the Company than to other parties. The products include without limitation Heineken beer products (33cl bottles and 50cl cans). The plaintiff reserves the right to provide further particulars following the completion of discovery."

4 2.3 The relevant paragraphs of Heineken Ireland's defence and counterclaim traverse those allegations.

5 2.4 In order to properly understand the claim it is also necessary to refer to the relevant provisions of the joint venture agreement and in particular, Clause 9.3.1 which reads as follows:-

"MBIL covenants with the Company that, during the duration of this Agreement, MBIL shall supply MBIL Packaged Products to the Company on terms which are no less favourable than those terms given by MBIL to other wholesalers buying volumes of MBIL Packaged Products comparable with the volumes bought by the Company."

In the context of the joint venture agreement "MBIL" is Murphy Brewery Ireland Limited, the then name of Heineken Ireland. The "company" is Nash Beverages Limited which is, in substance, the joint venture vehicle.

6 2.5 It will, therefore, be seen that the relevant allegation on the part of Hartside is that Heineken Ireland is in breach of its obligation under Clause 9.3.1. That allegation in turn would, for its establishment, require Hartside to demonstrate that Heineken Ireland had supplied "MBIL packaged products" to other wholesalers, who purchased comparable volumes of those products, on more favourable terms. It also needs to be noted that MBIL Packaged Products is defined in the joint venture agreement as meaning all bottled and canned drinks products produced or otherwise sold by any company within the MBIL Group. It should also be noted that the scope of the joint venture agreement is, on its terms, expressed to relate to the licenced trade which is defined as, in substance, referring to public houses (i.e. the holders of on-licences) and off-licence premises which operate exclusively as such, and is expressly defined so as not to include supermarkets, or the like, which may include off-licence sales as part only of their business. Against the background of the pleadings it is next necessary to turn to the request for discovery.

3. The Request for Discovery

2 3.1 The relevant request in respect of discovery is category 10, which is in the followings terms:-

"All documents evidencing, recording, discussing, or otherwise relation to the terms and conditions on which the defendant sells its 33cl Heineken and Coors Light bottled beers to parties, other than the Company, including but not limited to, documents evidencing the defendants supply terms with Musgrave Group Cork, and Galvin (Listowel), Monaghan Bottlers, J. Kelly (Tipperary Town), J. Donohue (Enniscorthy) and United Wine Merchants Limited (Northern Ireland) and documents evidencing details of discounts, promotional allowances, promotional pricing, special prices, rebates, long term agreements, incentives, advertising and marketing allowances provided in respect of the sale of products by the Company."

3 3.2 The reason given for seeking that category of discovery in the relevant letter of request was as follows:-

"The plaintiff pleads at paragraph 20(h) that the Company has been supplying its Heineken products to the Company on less favourable terms than it does with other parties who purchase comparable volumes. The defendant denies this at paragraph 15 of the Defence and Counterclaim. The category of documents sought will assist in determining what terms and conditions of sale the defendant offers to other parties who purchase similar or lower volumes as the Company. As such these documents are both relevant and necessary and ought to be discovered."

4 3.3 In response, solicitors for Heineken Ireland agreed to make limited discovery answering as follows:-

"The defendant is not prepared to make discovery on the terms requested above. The defendant is prepared to discover documents relating to the terms and conditions on which the defendant sells its 33cl Heineken and Coors Light bottled beers to Galvin (Listowel), Monaghan Bottlers, J. Kelly (Tipperary Town), J. Donohue (Enniscorthy) and United Wine Merchants Limited (Northern Ireland) for the last six years. Musgrave Group Cork is not a wholesaler and therefore the provisions of Clause 9.3 of the JVA are not applicable and therefore the defendant is not prepared to discover records of sales to it."

The dispute is confined, therefore, to documents relating to the supply of products to Musgrave Group Cork ("Musgraves").

5 3.4 In reply, solicitors for Hartside contested the contention that Musgraves are not a wholesaler as that term is used in the joint venture agreement. In further response the solicitors for Heineken Ireland stated the following:-

"It remains the defendant's strong contention that Musgrave Group Cork is not a wholesaler and that Clause 9.3 of the JVA is not applicable to it. As your client is well aware, there is a very considerable difference in the market place between wholesalers and multiples (such as for example Tesco, Dunnes Stores) and cash and carry/retail operators such as Musgraves and Galvins, with the latter two groups being treated as retailers and thus with different buying power to wholesalers such as the Company and the other named entities in respect of whom the defendant has agreed to make discovery. Musgrave Group is not a wholesaler despite the fact that it has a cash and carry operation. Cash and carry operations are different to wholesale operations with wholesalers typically delivering product to consumers and operating customer accounts other than on a purely cash basis. Musgraves also have a very significant distribution network to its franchisees with stores throughout Ireland and this makes them akin to multiples in the retail sector and...