Mythen Construction Ltd v Allianz Plc

• Jurisdiction: Ireland
• Judge: Mr Justice Maurice Collins
• Judgment Date: 08 June 2020
• Neutral Citation: [2020] IECA 148
• Date: 08 June 2020
• Docket Number: Court of Appeal Record No 2019/181
• Court: Court of Appeal (Ireland)

BETWEEN

MYTHEN CONSTRUCTION LIMITED

Plaintiff/Appellant

AND

ALLIANZ PUBLIC LIMITED COMPANY

Defendant/Respondent

[2020] IECA 148

Noonan J.

Power J.

Collins J.

Court of Appeal Record No 2019/181

THE COURT OF APPEAL

Discovery – Civil Liability Act 1961 s. 62 – Jurisdiction – Appellant seeking discovery – Whether the category sought was properly discoverable

Facts: The appellant, Mythen Construction Limited, in July 2017, commenced proceedings against the respondent, Allianz Public Limited Company, the statement of claim being delivered in February 2018. Mythen sought a declaration pursuant to s. 62 of the Civil Liability Act 1961 that Allianz was bound to indemnify it “in respect of the negligence, breach of duty, and/or breach of statutory duty, and breach of contract” on the part of Bidcon Construction Limited in relation to the installation of the roof of a leisure centre in New Ross, Co. Wexford. In the alternative, it sought an order directing Allianz to pay the sum of €1,803,843.55 to it. Judgment in that sum was also sought, as were damages for breach of contract. All of these reliefs were stated to be sought pursuant to s. 62. In September 2018, Mythen requested Allianz to make voluntary discovery of the combined construction insurance policy written by Allianz and held by Bidcon which included public liability cover (the Policy) and also sought discovery of “All documentation and communications (include electronic communications, all recordings etc) passing between [Allianz] and [Bidcon] and/or its legal advisors and/or the liquidator of that company and/or the liquidator’s legal advisers in relation to [Allianz’s] refusal to indemnity [Bidcon], including a letter of repudiation dated the 19th September, 2014”. Allianz agreed to discover the Policy. As regards the second category, it agreed to discover the declinature letter but Allianz’s solicitors expressed difficulty in understanding the basis on which the remaining documents were sought. A motion for discovery duly issued. The motion came on for hearing before the High Court (Reynolds J) on 4 February 2019. The Judge declined to direct any discovery beyond that already agreed. Mythen appealed to the Court of Appeal against the refusal of Reynolds J to direct Allianz to make discovery of the documents sought by Mythen. Mythen said that the Judge failed to grasp that s. 62 gives rise to a statutory exception to the normal privity of contract rule, citing the decision of the Supreme Court in Dunne v PJ White Construction Co Ltd (in liquidation) [1989] ILRM 803.

Held by Collins J that the High Court Judge erred in refusing discovery; the Judge went beyond the proper parameters of the jurisdiction she was exercising and decided the application not by reference to the issues on the pleadings but rather on the basis of her view as to how those issues would be resolved at trial. Apart from the objection that the discovery sought was not “necessary” because the validity of its declinature was not properly an issue in the proceedings, Collins J held that no grounds were advanced by Allianz to the effect that the discovery ought to be refused. In Collins J’s view, the category sought satisfied the requirements of Order 31, Rule 12 and was properly discoverable.

Collins J held that, in lieu of the order made by the Judge, he would make an order directing Allianz to make discovery on oath of the following: “All documentation and communications (include electronic communications, all recordings etc) passing between [Allianz] and [Bidcon] and/or its legal advisors and/or the liquidator of that company and/or the liquidator’s legal advisers in relation to [Allianz’s] refusal to indemnify [Bidcon].” As regards costs, Collins J noted that Allianz sought and obtained an order for the costs of the discovery application in the High Court. In Collins J’s opinion, that order could not be allowed to stand and must be set aside.

Appeal allowed.

JUDGMENT of Mr Justice Maurice Collins delivered on 8 June 2020

BACKGROUND

1 Mythen Construction Limited (“ Mythen”) appeals against the refusal of the High Court (Reynolds J) to direct Allianz Public Limited Company (“ Allianz”) to make discovery of certain documents sought by Mythen.

2 2. Before referring to those documents further, it is necessary to say something more about these proceedings.

The Proceedings

3 In 2012 Mythen was retained by a third party to construct a new swimming pool and leisure centre in New Ross, Co. Wexford. Mythen in turn appointed Bidcon Construction Limited (“ Bidcon”) as a domestic subcontractor to construct the roof of the leisure centre complex and that roof was in due course constructed by Bidcon.

4 In February 2014, the roof was extensively damaged during a storm. As a result. Mythen (as the primary contractor) says that it sustained losses amounting to a total of ₠1.803,843.55. It looked to Bidcon to make good these losses. At all material times, Bidcon held a combined construction insurance policy written by Allianz which included public liability cover (“ the Policy”). That being so. Bidcon looked to Allianz to indemnify it against any liability that it might have to Mythen. However, by letter of 19 September 2014 Allianz notified Bidcon's brokers that it was satisfied that the Policy did not provide for the loss, relying in this context on two specific exclusions in the Policy. 1

5 5. At some point (the precise date is not evident from the appeal papers) Mythen issued proceedings against Bidcon to recover its losses. However, in June 2016 Bidcon went into voluntary liquidation. Mythen then sought and obtained the leave of the High Court to proceed with its claim and, on 16 January 2017, it obtained judgment against Bidcon in the amount of ₠1.803.843.55 plus costs.

6 In July 2017, Mythen commenced these proceedings against Allianz, the Statement of Claim being delivered in February 2018. Mythen seeks a declaration pursuant to section 62 of the Civil Liability Act 1961 ( “Section 62”) that Allianz is bound to indemnify it “ in respect of the negligence, breach of duty, and/or breach of statutory duty, and breach of contract” on the part of Bidcon in relation to the installation of the leisure centre's roof. In the alternative it seeks an order directing Allianz to pay the sum of ₠1,803,843.55 to it. Judgment in that sum is also sought, as are damages for breach of contract. All of these reliefs are stated to be sought pursuant to Section 62.

7 Mythen's claims are – so Allianz says – “ misconceived at law”. According to Allianz, Mythen “ has no right of action, either pursuant to the provisions of section 62 of the Civil Liability Act 1961 or otherwise.” 2 Its assertion of a contractual claim against Allianz is also, it is said, “ misconceived at law”. Allianz also says that Bidcon had not been entitled to an indemnity and that indemnity had been declined validly and lawfully and that, if Bidcon wished to dispute that declinature, it was open to it to have the dispute referred to arbitration within 12 months of the “ date of disclaimer of liability”. Having failed to do so, any dispute was deemed to have been abandoned. As Mythen could not be in a better position than Bidcon would have been, Mythen is (according to Allianz) “ estopped in these proceedings from maintaining a claim which was not available to Bidcon.” 3

8 Notwithstanding these pleas. Allianz has not sought to have Mythen's claim dismissed on the basis that it is doomed to fail nor has it sought the trial of any preliminary issue directed to the issue of whether Mythen had any cause of action against it and/or whether any claim is time-barred or otherwise excluded because of Bidcon's failure to challenge the declinature of cover by Allianz within the time period stipulated in the Policy or at all.

The Request for Discovery and the High Court's Ruling

9 In September 2018 Mythen requested Allianz to make voluntary discovery of the Policy and also sought discovery of

“All documentation and communications (include electronic communications, all recordings etc) passing between [Allianz] and [Bidcon] and/or its legal advisors and/or the liquidator of that company and/or the liquidator's legal advisers in relation to [Allianz's] refusal to indemnity [Bidcon], including a letter of repudiation dated the 19 ^th September, 2014.”

10 The stated reason for seeking this documentation was Mythen's need to ascertain “the precise reason as to why indemnity cover was refused and the rationale therefor which is not at all clear from the Defence or from any correspondence received.”

11 Allianz agreed to discover the Policy. As regards the second category, it agreed to discover the declinature letter but Allianz's solicitors expressed difficulty in understanding the basis on which the remaining documents were sought. They failed to see “ what entitlement [Mythen] may have to challenge the decision of [Allianz] to decline an indemnity as it is not party to the contract of insurance.” Reference was also made in this context to the fact that Bidcon had not challenged the declinature within the appropriate time-period set out in the Policy.

12 A motion for discovery duly issued and the parties exchanged affidavits that effectively re-iterated their respective positions. The motion came on for hearing before Reynolds J on 4 February 2019. The Judge declined to direct any discovery beyond that already agreed. In her ex tempore ruling, she stated as follows:

“.. I'm quite satisfied that in fact you have no entitlement to the discovery that's being sought. It's clear there's no privity of contract between the plaintiff and the defendant and indeed the authority as open[ed] to me is quite clear. The onus is clearly going to rest on the defendant to establish that they're entitled to repudiate the contract, but really the plaintiff has no hand, act or part in that and as...