Michael Leahy v OSB Group Ltd and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 15 January 2015
• Neutral Citation: [2015] IEHC 10
• Court: High Court
• Date: 15 January 2015

Leahy v OSB Group Ltd & Ors

BETWEEN:

MICHAEL LEAHY

PLAINTIFF

AND

OSB GROUP LIMITED, DOLLKEN-KUNSTSTOFFVERARBEITUNG GMBH AND EIRFOAM

DEFENDANTS

[2015] IEHC 10

[No. 2605 P/2010]

THE HIGH COURT

Breach of contract - Manufacture of kitchen worktops - Not produced to specification - Application pursuant to O. 31 r. 21 of the Rules of the Superior Courts - Dismiss for want of prosecution – Disclosure-Failing to make disclosure in accordance with court order - Whether non-compliance deliberate - Cross-examination - Directed to swear supplemental affidavit in respect of documents within 3 weeks

Facts The case involved an application by the defendants pursuant to O. 31 r. 21 of the Rules of the Superior Courts for an order to dismiss the plaintiff”s action for want of prosecution and for failing to make disclosure in accordance with a court order dated 11th June 2012. The plaintiff, a sole trader, ran a kitchen worktop manufacturing company. He entered into a contract with the defendant for the supply of the raw materials required to manufacture the worktops. This material was to be produced to the plaintiff's specification by the second-named defendant, a German company. The plaintiff claimed that the contracted raw materials were not produced meaning his business ultimately failed and he suffered substantial losses which he quantified at some €6.5 million. Subsequently, he claimed damages for breach of contract. During the course of the trial the plaintiff failed to produce certain documents in relation to his business finances. Counsel for the defendant said the plaintiff was evidently a sophisticated businessman who clearly understood what was required of him in discovery. He further submitted that when one analysed the documents, one could only come to the conclusion that the plaintiff had not been truthful and that he had deliberately refused to comply with the discovery order. The effect of which would be to preclude the defendants from having a fair trial and the only way that could be prevented was by making the order sought.

Held The judge considered the relevant case law ( Campion v. Wat [2013] IEHC 45; Green Pastures (Donegal) v. Aurivo Co-Operative Society Ltd & Anor [2014] IEHC 209) Before the judge could accede to an application to strike out the plaintiffs claim, he had to be satisfied that 1. there was an ongoing failure to comply with the discovery order; 2. that such failure was clearly deliberate and 3. that the consequences of that failure would deprive the defendants of a fair trial. The judge said the defendants may have gone outside the scope of the order in seeking documents from the plaintiff. The plaintiff was ordered to make discovery of his business accounts. The order did not apply to the accounts of every business that the plaintiff had been involved in but rather to his business of the manufacturing and sale of kitchen countertops. That business was short lived. The documents that were discovered by the plaintiff appeared to relate to his pre-existing kitchen manufacturing business and on one view therefore were not captured by the court order at all. Accounts of some description were produced by the plaintiff. The defendants had however, in correspondence with the plaintiff and his accountant, sought considerably more than just “business accounts”. In spite of that, the judge found himself in a similar position to that of Ryan J in Campion in that he was unable to come to a conclusion as to whether the non-compliance was deliberate and said the issue could only be resolved by way of cross-examination at trial. The judge said it was appropriate to bring the application owing to the fact that there was little or no response from the plaintiff to the order for discovery and little effort made by him to comply with it until the eleventh hour, yet the judge declined to make an order striking out the plaintiff's claim.

-The judge directed the plaintiff swear a supplemental affidavit of discovery within three weeks.

RSC O.32 r21

RADIAC ABRASIVES INC v PRENDERGAST UNREP BARRON 13.3.1996 1996/8/2240

W (M) v W (D) 2000 1 ILRM 416 2002 FAM LJ 35 1999/25/7994

CAMPION v WAT UNREP RYAN 8.2.2013 2013/9/2504 2013 IEHC 45

MURPHY v J DONOGHUE LTD & ORS 1996 1 IR 123 1995 2 ILRM 509 1995/10/2912

GREEN PASTURES (DONEGAL) v AURIVO CO-OPERATIVE SOCIETY LTD & RAMSEY UNREP RYAN 4.4.2014 2014 IEHC 209

JOHNSON v CHURCH OF SCIENTOLOGY UNREP KEANE 7.11.2001 2001/12/3513 (EX TEMPORE)

Background

1 1. This is an application brought by the second and third-named defendants herein ("the defendants") pursuant to O. 31 r. 21 of the Rules of the Superior Courts for an order dismissing the plaintiff's action for want of prosecution and more particularly, for failing to make discovery in accordance with the order of the court made herein on the 11th June, 2012.

2 2. The plaintiff is a sole trader and carries on a kitchen manufacturing and sales business. He alleges in his statement of claim that in 2003 and 2004 he was interested in setting up a new business to manufacture and sell customised laminated worktops for the kitchen and other furniture manufacturing industries. He alleges that on the 6th April, 2004 he purchased a specialised piece of equipment known as a BAZ machine to make these worktops. The plaintiff claims that he entered into a contract with the defendants for the supply of the raw materials required to manufacture the worktops. This material was to be produced to the plaintiff's specification by the second-named defendant, a German company. The first and third-named defendants appear to be the Irish distributors/agents for the second-named defendant.

3 3. In essence, the plaintiff claims that the contracted raw materials were not produced, or at least not produced to specification or on schedule, with the result that his business ultimately failed and he suffered substantial losses which he quantifies at some €6.5 million. He claims damages for breach of contract from the defendants.

The Proceedings

4 4. These proceedings were commenced by Plenary Summons dated the 11th March, 2010 probably fairly close to the statutory six-year limitation period. At that time, the plaintiff was represented by solicitors and counsel. He now appears in person having discharged his legal team. The proceedings have followed a fairly leisurely course. An amended Statement of Claim was delivered on the 20th January, 2011. The defendants delivered their Defence on the 4th October, 2011. Notices for Particulars, Replies and Rejoinders of extraordinary length were exchanged between the parties.

5 5. By letter dated the 15th November, 2011, the defendants' solicitors sought voluntary discovery of 16 categories of documents from the plaintiff. This was not responded to and a motion issued. Because the motion was contested, it was too lengthy for a Monday list and was eventually heard by Birmingham J. on the 11th June, 2012 when he ordered the plaintiff to make discovery of all the categories sought within 9 weeks from that date.

6 6. On the 12th August, 2012, the plaintiff furnished some documents to the defendants but no affidavit of discovery. On the 20th August, 2012, the defendants' solicitors wrote to the plaintiff advising him that the purported discovery made was inadequate. The plaintiff did not respond to this letter and on the 12th November, 2012, the defendants issued a motion to dismiss the claim for failure to make the discovery ordered. This was due to come on for hearing on the 28th January, 2013 and shortly before, on the 18th January, 2013 the plaintiff filed a duly sworn affidavit of discovery. When the matter came before the court, the motion was struck out on consent and the costs reserved.

7 7. On the 22nd April, 2013, the defendants' solicitors wrote to the plaintiff seeking to have the defendants' forensic accountants liaise with the plaintiff's accountant with a view to inspecting the plaintiff's business accounts, an offer made by the plaintiff in an affidavit sworn in March, 2012 to contest the original discovery application. There was no response to this letter or subsequent reminders in May and June. Eventually the solicitors wrote on the 26th June, 2013 to say that if no response was forthcoming, a further motion would be brought to strike out the claim for failing to make discovery. Again there was no response and on the 9th January, 2014, the present notice of motion was issued.

The Documents in Issue

8 8. The affidavit grounding this motion was sworn by the defendants' solicitor, Mr. Hugh O'Neill, on the 8th January, 2014. I think it is fair to say that the primary complaint made in the affidavit relates to a failure on the part of the plaintiff to discover the documents in category 2 of the order of the 11th June, 2012, being:

2 "2. All records, notes, statements, reports, correspondence, or other documents comprising the plaintiff's business accounts relation to the plaintiff's business (or intended business) of the manufacturing and sales of kitchen countertops."

9 9. Mr. O'Neill averred that the plaintiff's purported compliance with the discovery order under this category extended to 2 documents only, each comprising one page. Both documents purport to be balance sheets identifying the client as the plaintiff, the first dated the 31st December, 2004 and the second being for the two years ending on the 31st December, 2006. These appear to emanate from the plaintiffs accountant. At paragraph 19 of his affidavit, Mr. O'Neill notes that despite the fact that these balance sheets disclose expenditure of some €12,000 for accountant's services, no further documents relating to the plaintiffs business accounts have been forthcoming. He further comments that despite these balance sheets showing very substantial expenditure under the...