IBB Internet Services Ltd v Motorola Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 07 December 2015
• Neutral Citation: [2015] IECA 282
• Date: 07 December 2015
• Court: Court of Appeal (Ireland)
• Docket Number: Record No. 2015/191 Record No. 2015/192 Record No. 2015/193

Between/

IBB Internet Sevices Ltd., Irish Broadband Internet Services Ltd. (Trading as Imagine Networks) and Imagine Communications Ltd.

Plaintiffs/Appellants

and

Motorola Ltd.

Defendant/Respondent

[2015] IECA 282

Ryan P.

Peart J.

Hogan J.

Record No. 2015/191

Record No. 2015/192

Record No. 2015/193

THE COURT OF APPEAL

Practice & procedure – Evidence – Discovery – Order for discovery made in High Court subject to appeals and cross appeals

Facts: The parties had begun litigation regarding the supply of a ‘WiMax’ network by the respondent to the appellants. The High Court in February 2015 had made a ruling on applications for discovery by both parties and the ruling was the subject of appeals and cross appeals.

Held by Mr Hogan J, that the Court would vary the order below in a number of respects. Commenting generally, the Court agreed fully with Barrett J”s comments on the burden discovery orders were placing on the legal system in the State. Whilst the Court was prepared to vary the order in respect of a number of categories of documents, the task facing the Court was greatly reduced by the benefit of Barrett J”s comprehensive initial judgment. Framus v CRH plc [2004] 2 IR 20 considered.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 7th day of December 2015

1 These are appeals and cross-appeals from the decision of the High Court (Barrett J.) delivered on 3rd February 2015, IBB Internet Services Ltd. v. Motorola Ltd. [2015] IEHC 54, dealing with applications for discovery made by both the plaintiffs and the defendant in these proceedings. Both parties have appealed (in part) aspects of the judgment in respect of particular categories of discovery insofar as it orders them to make discovery in favour of their opponent and fails to direct their opponent to make discovery.

2 The parties originally sought highly detailed categories of discovery from each other. Some of these matters were agreed or compromised. The disputed categories were dealt with by Barrett J. in the course of a very detailed judgment. So far as this appeal is concerned, naturally this judgment addresses only those categories of discovery which were the subject of an appeal or cross-appeal.

3 The plaintiff companies are internet service provider companies who specialise in cloud computing and advanced internet delivery systems. The present proceedings commenced in 2010 and involve a claim made by the plaintiff companies (‘the Imagine Group’) for damages for breach of contract and for negligence for some €138m. arising from the roll-out of a WiMax Network by the defendant (‘Motorola’). Although the proceedings were swiftly admitted to the Commercial Court, it is a matter of regret that the action still has not proceeded to trial, in part because of a plethora of preliminary pre-trial applications which have delayed its progress.

4 The essence of the plaintiffs' case is that Motorola acted in breach of contract and were negligent in the manner in which it supplied this WiMax network. The plaintiffs contend that the network as supplied did not have the requisite capacity for their needs. They contend that that Motorola undertook or represented that the network would have sufficient throughput and capacity and that whereas the network might have had sufficient throughput or capacity, they say that it did not meet both requirements. So far as the plaintiffs are concerned, this combination of throughput and capacity is vital, because it is this very combination which determines the speed of the broadband connectivity. This is then relevant to the number of customers on each base station which can be provided with the requisite broadband speed and, by extension, the commercial viability of each such station.

5 It is also important to note that the plaintiffs further contend that the defendant is guilty of negligent misrepresentation and negligent misstatement regarding the capacity and suitability of the WiMax network.

6 In approaching the issues of discovery it is important to recall that there are essentially three separate periods of time which form the background to this dispute. First, there was the tender period from 5 August 2008 until March 2009 after which Imagine contends (and Motorola disputes) that Motorola was selected as the preferred bidder. Second, there was the period from March 2009 until 13th October 2009 when what has been described as the Master Services Agreement (‘MSA’) was signed. Third, there was the period from 13th October 2009 to 3rd December 2009 when the Equipment Financing Agreement (‘EFA’) was signed. It was only when the latter agreement was signed that the MSA became binding.

7 The agreement envisaged that the equipment and services to be provided by Motorola were to be built in clusters of 15 sites at a time. Imagine ultimately ordered 8 clusters, with 120 sites in total. The sites contained masts which connected with computer equipment within the home. Such connectivity was vital if the customer was to have satisfactory access to internet or voice technology by means of a high broadband speed. The questions of whether this equipment worked satisfactorily and whether there was a delay in the roll-out are at the heart of the present case.

8 Although the present proceedings were commenced on 23rd December 2010, the contractual relationship between the parties did not end until 29th April 2011 when Motorola's rights and liabilities under the MSA were assigned to a new entity called NSM. Like Barrett J., I would gratefully adopt the summary of the issues and the general background which is found in the judgment of Charleton J. at an even earlier stage of the proceedings in IBB Internet Services Limited & Ors v. Motorola Ltd. [2013] IEHC 541 where he stated:

‘1. This action was commenced by plenary summons on 23 December 2010. While the plaintiffs are separate legal entities, they claim to be a single economic entity and assert the right to be treated as such in law and in fact. They claim damages for breach of contract and in negligence and in misrepresentation against the defendant due to alleged delay in the rollout of a broadband Internet network and in the dysfunction of such portion of that network as was provided. The relevant contract was negotiated between March and October 2009 and was to become operational in December of that year. The parties agree that on 13 October 2009 a written contract, called a master services agreement, was signed between the second named plaintiff and the defendant and that this was later novated to the first named plaintiff on 10 November 2009. In addition, the plaintiffs allege that the third named plaintiff entered into a collateral agreement, apparently oral, with the defendant.

Representations and warranties seem crucial to the case made by the plaintiffs as to the suitability and functioning of the network. The main contract of 13 October 2009 contains clauses limiting liability and confining the relationship between the parties to contract in the terms as therein set out. The series of sites over which this network was to operate was to be supplied by the defendant to the plaintiffs in groups of 15, amounting eventually to 120 sites actually supplied, and there were 5 others included in a test module. In all, 402 sites were projected ultimately. Provisional acceptance of the sites under a term of the written contract is alleged by the defendant to be a warranty of satisfaction. Of these there are said to be 51 signed acceptances, on behalf of which plaintiff or on behalf of all plaintiffs, together with 74 deemed acceptances by virtue of the elapse of time. In addition, the contract provided for a final acceptance of which 31 were signed, in the same context, and 94 are deemed. The terms of the contract seem to be such that unless a batch of 15 sites is ordered, by whichever of the plaintiffs is responsible, there is no obligation on the defendant to supply anything or on the plaintiff to order anything. Because of dissatisfaction, whether for good reason or not, no sites have been ordered since July 2010.

2. It is more than unusual for a case entered into the commercial list to be three years old and not to have been tried. This case has not even proceeded to the stage of discovery. The plaintiffs claim to have been bombarded by procedural motions, of which they say this is the latest. The defendant claims that by reason of pleading alternate facts, there has been a necessity for the plaintiffs to recast the statement of claim on three occasions, the current version being the fourth. There are three prior written judgements of the High Court on this claim about this very lengthy statement of claim; of Kelly J on 6 July 2011, of Clarke J on 9 November 2011 and of McGovern J of 12 October 2012. In addition, the High Court has refused the defendant security for costs, which ruling has been appealed to the Supreme Court and is awaiting judgement. It is impossible to feel satisfaction with the progress of this case even since that date of the last version of the statement of claim; the fourth. The Court is entitled to emphasise that, whatever the rights and wrongs of this series of pre-trial manoeuvrings, about which no comment is made, the parties are under a duty to the court to prepare a case for hearing through cooperating with each other in aid of the fundamental obligation of identifying the issues to be tried and making the case ready for hearing.’

9 There is no significant dispute between the parties in these proceedings as to the applicable law, or that the applicable criteria for ordering discovery are the relevance of the documentation and the necessity of its discovery to the fair disposal of the matter arising or for the saving of costs, subject to the observation of Murray J. in Framus v. CRH plc [2004] 2 I.R. 20, 38 that once relevance is...