De Lacy v Coyle

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Denis McDonald
Judgment Date18 Jul 2018
Neutral Citation[2018] IEHC 428
Docket Number[2017 No. 7252 P.]

[2018] IEHC 428

THE HIGH COURT

McDonald J.

[2017 No. 7252 P.]

BETWEEN
DECLAN DE LACY
PLAINTIFF
AND
PAUL COYLE, MARGARET COYLE, EMILY COYLE

AND

AMY COYLE
DEFENDANTS

Practice & procedure – Evidence – Disclosure – Company – Liquidator seeking disclosure of documents from directors

The plaintiff had been appointed liquidator of Decobake Ltd, of which the defendants were directors and employees. He considered that the defendants had sought to prevent the liquidation and had failed to disclose certain passwords and documents including recipes. The defendants opposed the application for disclosure and sought to counterclaim

Held by the Court that the respective motions for disclosure would be granted in part. The Court reviewed the jurisprudence and principles to be applied and made orders accordingly. The Court also deprecated the lengthy nature of the discovery hearing and judgment and commented generally parties to litigation were to attempt to resolve discovery disputes before applying to the Courts. Framus Ltd. v. CRH plc. [2004] 2 IR 20,BAM PPP PGGM Infrastructure v. National Treasury Management Agency [2015] IECA 246, IBB Internet Services Ltd. v. Motorola Ltd. [2015] IECA 282, and Boehringer Ingelheim Pharma GmbH v. Norton (Waterford) Ltd. [2016] IECA 67 applied.

JUDGMENT of Mr. Justice Denis McDonald delivered on the 18th day of July, 2018
1

There are two motions for discovery before the court namely: -

(a) the plaintiff's motion dated 12th April, 2018 in which the plaintiff seeks an order directing the defendants to make discovery of fifteen separate categories of documents running from Category A to Category O; and

(b) a motion brought by the defendants (who are currently acting in person) dated 17th April, 2018 in which the defendants seek an order directing the plaintiff to make discovery of 22 categories of documents.

Background
2

These proceedings were commenced in August 2017 by the plaintiff in his capacity as official liquidator of Decobake Ltd. (in liquidation) (‘Decobake’). Decobake was incorporated on 5th May, 2000. Decobake was involved in a wholesale and retail business selling baking ingredients and equipment. It operated from premises at Clane Business Park, Clane, Co. Kildare and from 3/4 Bachelors Walk, Dublin 1. Among the innovations introduced by Decobake was the manufacture of what is described as ‘ready-to-roll icing’ together with printer cartridges with edible ink. This allows printing onto A4 size sugar sheets and Decobake was a leader in the market for products of this kind.

3

On 29th June, 2017 a petition was brought on behalf of Dublin City Council for the winding up of Decobake. On the same day an application was made for the appointment of a provisional liquidator. The plaintiff in these proceedings Mr. de Lacy was appointed provisional liquidator on that day. Subsequently, on 24th July, 2017, the court made an order winding up Decobake.

4

These proceedings were commenced by the plaintiff on 8th August, 2017. The defendants named in the proceedings were all either directors or employees of Decobake. Mr. Paul Coyle, the first named defendant and Mrs. Margaret Coyle, the second named defendant were both directors of Decobake. As explained in paragraph …..below, the remaining defendants are their daughters who were employees of Decobake.

5

In these proceedings the plaintiff makes a number of allegations against the defendant. These include the following allegations in para. 12 of the statement of claim: -

(a) the defendants have interfered with and obstructed the plaintiff in carrying out his duties as liquidator and have attempted to ‘ sabotage the liquidation and/or to damage the said Company in relation to its employees, supplies and/or customers to the advantage of the defendants and to the detriment of the liquidation and/or the Creditors’.

(b) on 30th June, 2017 the first and second defendants misappropriated a sum of €49,491.00 from a company bank account and this sum was only returned to the plaintiff's solicitor a short time prior to the hearing of the ex parte application for an injunction;

(c) the defendants convened and attended staff meetings following the appointment of the provisional liquidator with a view to discouraging employees from cooperating with the plaintiff;

(d) the defendants have failed to furnish to the plaintiff all passwords and access codes to enable him to have access to the company's email systems and email accounts;

(e) the defendants allegedly made contact with Musgrave Ltd. (the largest customer of Decobake) asserting personal intellectual property rights and trade secrets in respect of the cartridges and sugar sheets purchased by Musgrave Ltd. from Decobake;

(f) there are also allegations made in relation to the removal of motor vehicles;

(g) there is an allegation that the fourth named defendant had as part of her employment with Decobake set up a Facebook ‘chat group’ known as the Decobake caking and decoration chat group and that this is now the property of Decobake. It is alleged that this chat group has effectively being taken over by the fourth named defendant for her own purposes and is being used by her to post messages opposing the plaintiff's appointment as a liquidator and using the chat group to promote her own personal business ventures and the sales of her own personal products.

6

One of the most significant allegations made in the statement of claim is that between 2011 and 2014 it was Decobake and its employees which developed the recipe and method of production for the icing used to make sugar sheets and developed the process for transforming this icing into A4 size sheets and affixing it to a backing page. It is also alleged that it was the company and its employees that developed the original recipe and method of production for Decobake's ready-to-roll icing product which was traded by Decobake under the brand name ‘Ice Wise’.

7

The allegations which are made by the plaintiff are vigorously contested by the defendants. The defendants have delivered a very full defence. They have also delivered a document described as ‘additional defence’ and they have also delivered a counterclaim. Among the allegations made by the defendants are the following: -

(a) It is alleged in para. 23 of the defence that any loss suffered by Decobake which has been sustained is as a result of the plaintiff's ‘total mishandling of the business of the Company and its lack of knowledge and incompetence of a very specific market.’ It is alleged that the plaintiff has been ‘grossly negligent’ in his stewardship of the liquidation.

(b) In para. 38 of the defence, the defendants contend that the plaintiff misled the court in an ex parte motion. In this regard, it should be noted that on 8th August, 2017 a number of orders were made on an ex parte basis by the court on the application of the plaintiff. The order was subsequently continued by consent by an order made on 12th October, 2017. However, it was later varied by a further order of the court made on 20th October, 2017.

(c) The first defendant contends that any intellectual property rights in relation to the recipes and methods of production of the sugar sheets, the Ice Wise product, the edible ink and the edible ink printers are owned by him personally and not by Decobake.

(d) In the counterclaim, it is alleged that the plaintiff has mismanaged the affairs of the company and that the plaintiff has defamed, slandered and libelled the defendants.

(e) It is also alleged in the counterclaim that the plaintiff has infringed the intellectual property rights of the first named defendant.

(f) Among the relief claimed in the counterclaim is a declaration that the first named defendant is the rightful owner of the relevant intellectual property rights. In addition to claiming payment of royalties and damages, the defendants seek aggravated and/or exemplary damages.

8

I must emphasise that the allegations on both sides are significantly more extensive than I have set out above. However, at this point in this judgment, I do not believe that it is necessary to set out all of the allegations made on both sides. It is sufficient to record that both sides have made very strong allegations against the other.

The Principles to be Applied
9

Before turning to the respective applications for discovery, it is important that I should identify the relevant principles to be applied by the court in considering applications of this kind. I have been referred to a large number of authorities. I have, in particular, been referred to the decision of the Supreme Court in Framus Ltd. v. CRH plc. [2004] 2 I.R. 20 and three decisions of the Court of Appeal namely, BAM PPP PGGM Infrastructure v. National Treasury Management Agency [2015] IECA 246, IBB Internet Services Ltd. v. Motorola Ltd. [2015] IECA 282, and Boehringer Ingelheim Pharma GmbH v. Norton (Waterford) Ltd. [2016] IECA 67.

10

In the BAM case, Ryan P. at para. 29 summarised the relevant principles to be applied. When para. 29 of the judgment of Ryan P. in that case is read with para. 12 of the judgment of Finlay Geoghegan J. in the Boehringer case and paras. 12 and 13 of the judgment of Hogan J. in the IBB Internet Services case, it seems to me that the principles can be summarised as follows: -

(a) The primary test is whether the documents are relevant to the issues between the parties. Once that is established, it will follow in most cases that discovery is necessary for the fair disposal of those issues;

(b) relevance is determined by reference to the pleadings. Order 31, rule 12 specifies that discovery of documents must relate to a matter in question in the case;

(c) however, relevance must be established as a matter of probability and not only possibility;

(d) the formulation by Brett L.J. in the Peruvian Guano case (1882) 11 Q.B.D. 55 remains the applicable test for...

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