Kelland Homes Ltd v Ballytherm Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Quinn
• Judgment Date: 31 January 2019
• Neutral Citation: [2019] IEHC 46
• Docket Number: [2017 No. 110124 P.]
• Court: High Court
• Date: 31 January 2019

BETWEEN

KELLAND HOMES LIMITED

PLAINTIFF

AND

BALLYTHERM LIMITED

CLONDALKIN BUILDERS PROVIDERS LIMITED

JAMES McMAHON (DUBLIN) LIMITED

COVESTRO BV

DEFENDANTS

[2019] IEHC 46

[2017 No. 110124 P.]

THE HIGH COURT

Discovery – Further and better discovery – Supplemental discovery – First, second and third defendants seeking further and better discovery – Whether the fourth defendant was required to make supplemental discovery

Facts: On 28th November, 2018 two separate motions regarding discovery were issued before the High Court as follows: 1) a motion requiring the fourth defendant, Covestro BV, to make further and better discovery issued on behalf of the first, second and third defendants, Ballytherm Ltd, Clondalkin Builders Providers Ltd and James McMahon (Dublin) Ltd; and 2) a motion by the first defendant for orders requiring the fourth defendant to make supplemental discovery arising from the pleas contained in the notice of indemnity and contribution.

Held by Quinn J that, concerning the first, second and third defendants’ motion for further and better discovery: 1) he would direct that Mr Schaefer swear a second affidavit addressing (a) the matter of the litigation hold and document retention policies and describing the actions, if any, the fourth defendant took to preserve manual, electronic and other records from the time when it had knowledge of the existence of a potential legal claim against it, (b) the affidavit should correct and expand on paragraph 12 and the Second Schedule of Mr Schaefer’s first affidavit, (c) the affidavit describes efforts made through Microsoft to retrieve deleted emails, (d) paragraph 12 and the Second Schedule should also address the matter of hand-written notes and other hard copy documents, (e) the affidavit should address the question of records of the incident when it was discovered that some of the chemical polyol provided to the first defendant was missing a necessary stabiliser, (f) the affidavit should confirm the position regarding complaints, whether from Swisspor or otherwise and (g) the affidavit should confirm the identity of data subjects searched against; (2) the first, second and third defendants deliver a list of search terms they claim were omitted; (3) the redaction of price information should be reversed in a number of documents; and (4) the attachments to doc no. 0000003369 should be discovered or further explained.

Quinn J held that, concerning the motion for supplemental discovery, the fourth defendant was to make discovery of the following categories sought: Category 2 - all documents evidencing or recording the contractual relationship between the first defendant and the fourth defendant and the services the fourth defendant agreed to provide to the first defendant, limited to documents which came into existence at or after a time commencing when the transition from PIR3003 to PIR3009 was first proposed; Category 3 - all documents recording or evidencing any quality control in respect of the raw materials used in the manufacture of PIR 3009, including but not limited to testing carried out by the fourth defendant on the raw materials and the Technical Data Sheets Specification and Certification of Analysis for each of the raw materials; Category 4 - all documents recording or evidencing the advice and guidance provided by the fourth defendant to the first defendant in relation to the manufacture of insulation and the technical assistance provided by the fourth defendant to the first defendant, limited to documents which came into existence at or after a time commencing when the transition from PIR3003 to PIR3009 was first proposed; Category 5(a) and (b) - (a) all documents evidencing, recording or relating to the testing carried out by the fourth defendant for BBA approval on behalf of the first defendant, and (b) all documents evidencing or recording the information provided by the fourth defendant to the first defendant in relation to the composition of chemical PIR 3009 for the purpose of maintaining BBA Agrément Approval; Category 8 - all documents evidencing or recording the fourth defendant’s sample retention policy and all documents relating to the retention and/or destruction of samples of chemical PIR3009.

Judgment approved.

JUDGMENT of Mr. Justice Quinn delivered on the 31st day of January, 2019.

1 This judgment relates to contested applications for further and better discovery and for supplemental discovery in which the disputes are between the defendants.

2 Elder Heath is a residential development at Kiltipper, Tallaght, Dublin 24 which will comprise a total of 370 homes when completed.

3 The plaintiff is the developer of Elder Heath. In or about September, 2016 the plaintiff became aware that some of the houses were experiencing settlement or sinking of ground floor slabs in the houses causing the floors to sink below the level of the skirting boards. The plaintiff claims that the settlement was caused as a result of defective floor insulation panels produced by the first named defendant (‘The Ballytherm insulation’). In particular, it is claimed that the insulation panels shrank causing voids to form beneath the floor slabs. When these proceedings commenced the problem had been revealed in 58 houses.

4 Some of the houses were already occupied, and the plaintiff undertook a remediation scheme involving at least the following.

1. Breaking the ground floor slabs in the dwelling houses.

2. Taking up and replacing the insulation.

3. Reconstructing the ground floor slab.

4. Reinstating the floor covering.

5. Temporary rehousing of residents.

6. Compensation to residents.

5 The Plaintiff claims that the remediation programme has put it to the following direct cost.

Per House	Total
(a)	Cost of remedial works:	€28,253.00	€1,638,647.00
(b)	Compensation to homeowners:	€3,000.00	€174,000.00
(c)	Costs of moving residence and providing temporary accommodation, storage and associated expenses:	€349,914.00

6 These amounts were estimates as at the time of the commencement of the proceedings on 10th November 2017 and brought the total cost to the plaintiff of the remediation programme to an amount in the order of €2.2 million. The plaintiff says that its costs and losses are continuing having regard to the cost of expert reports and supervision, diversion of resources and time to address concerns held by residents whose properties have been purchased from the plaintiff and reputational damage and lost house sales.

7 The plaintiff claims that in March, 2017 the First Defendant agreed to meet the cost of the remediation programme and seeks an order for specific performance of that agreement. In the alternative, the Plaintiff claims against all the defendants damages for negligence, breach of duty, including breach of statutory duty, nuisance, breach of warranty and breach of contract.

8 The Second and Third Named Defendants are suppliers of building products to the construction industry. They sold the Ballytherm insulation to the Plaintiff.

9 The Fourth Defendant is a Dutch company, which supplied to the First Defendant a pre-mixed foam system used by the First Defendant in the manufacture of the insulation panels. A component of the foam system is a chemical referred to as polyol. Prior to 2014 the polyol was Chemical PIR3003. During 2014 it was replaced by Chemical PIR3009. The First Defendant claims that if the insulation panels produced were defective this was caused by defects in polyol PIR3009 for which the Fourth Defendant is liable.

Claims against the Fourth Defendant

10 All the defendants deny liability. Each of the First, Second and Third Defendants has served a Notice of Indemnity and Contribution on the Fourth Defendant. The Notice contains particulars of their claims against the Fourth Defendant which are of central importance in determining the issues now before the court. The First Defendant says that since 2005 the Fourth Defendant and its predecessors in title have supplied the First Defendant with its pre-mixed foam system which included the supply of a polyol (PIR) in batches. It also provided technical advice and knowhow, including laboratory testing and assistance with the setting of the First Defendant's production line, and the provision of same on an ongoing basis.

11 The First Defendant says that it expressly made known to the Fourth Defendant and the Fourth Defendant knew the business in which the First Defendant was engaged and the purpose for which the pre-mixed foam system, including the PIR, was required.

12 The First Defendant pleads that the Fourth Defendant represented to it that it was one of the top system houses in Europe and that the pre-mixed foam system it offered to provide including the PIR was suitable for use in the manufacture of the Ballytherm insulation and was of merchantable quality and fit for purpose. Between 2005 and June, 2015 the First Defendant paid the total sum of €77,757,044.00 to the First Defendant for the purchase of pre-mixed foam systems including PIR. It is said that throughout the relationship the Fourth Defendant carried out testing on the polyol supplied and the insulation boards manufactured by the First Defendant using the system supplied by the Fourth Defendant.

13 The First Defendant claims that the Fourth Defendant always refused to disclose the composition of the batches of PIR supplied by it on the basis that this a trade secret and constituted commercially sensitive information.

14 The Fourth Defendant carried out testing for BBA Agrément approval on behalf of the First Defendant and was aware that these tests and the information provided in relation to the composition of the raw materials including the PIR would be relied on by the persons to whom the Ballytherm insulation was supplied including the Second and Third Defendants and the Plaintiff.

15 It is said that in respect of each...