Spring Grove Services (Ireland) Ltd v O'Callaghan and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Herbert
• Judgment Date: 31 July 2000
• Neutral Citation: [2000] IEHC 62
• Court: High Court
• Docket Number: No. 7358P/1998
• Date: 31 July 2000

[2000] IEHC 62

THE HIGH COURT

No. 7358P/1998

SPRING GROVE SERVICES (IRELAND) LTD v. O'CALLAGHAN & ORS

BETWEEN

SPRING GROVE SERVICES (IRELAND) LIMITED

PLAINTIFF

AND

DENIS O'CALLAGHAN, SEAMUS DESMOND AND NATIONAL LINEN LIMITED

DEFENDANTS

Citations:

COMPETITION ACT 1991

CHITTY ON CONTRACTS 27ED V2 370–375

ROBB V GREENE 1895 2 QB 315

LANSING LINDE LTD V KERR 1991 1 WLR 251

PRINTERS & FINISHERS LTD V HOLLOWAY 1965 RPC 239

COMPAGNIE FINANCIERE ET COMMERCIALE DU PACIFIQUE V PERUVIAN GUANO CO LR 11 QBD 55

STERLING WINTHROP GROUP LTD V FARBENFABRIKEN BAYER AG 1967 IR 97

JONES V MONTEVIDEO GAS CO 5 QBD 556

ALLIED IRISH BANKS PLC (AIB) V ERNST & WHINNEY 1993 1 IR 384

SIMPSON BAILEY & EVANS DISCOVERY & INTERROGATORIES 2ED 2

RULES OF SUPERIOR COURTS (NO 2) (DISCOVERY) 1999 SI 233/1999

RSC O.31 r12

BROOKS THOMAS LTD V IMPAC LTD 1999 1 ILRM 171

HOGAN V BAYER PRODUCTS LTD 1950 84 ILTR 145

WARNER LAMBERT CO V GLAXO LABORATORIES LTD 1975 RPC 354

CHURCH OF SCIENTOLOGY OF CALIFORNIA V DEPT OF HEALTH & SOCIAL SECURITY 1979 1 WLR 723

Abstract:

Commercial law - Company law - Competition - Duties of directors - Fiduciary duty - Breach of confidence - Practice and procedure - Discovery - Whether plaintiff guilty of delay in prosecuting claim - Whether further and better discovery necessary - Whether documents in question confidential - Rules of the Superior Courts, 1986 (SI 15) Order 31 rule 12.

The first and second defendants had been former directors of the plaintiff company who had left the plaintiff company and had set up the third defendant in competition with the plaintiff company. The plaintiff had initiated proceedings claiming that the first and second defendants had wrongfully used confidential information belonging to the plaintiff. Orders of discovery had been granted against the defendants. The plaintiff brought a motion seeking further and better discovery. Herbert J was satisfied that the plaintiff was clearly entitled to the discovery of all accounts of the third defendant. Further orders of discovery were also made. The costs of the motion were reserved.

Mr. Justice Herbert

THE FACTS

1 This Action was commenced by way of a Plenary Summons issued on the 24th June 1998. Following an appearance entered on the 7th July 1998, a Statement of Claim was delivered on the 13th of July 1998. It is pleaded in the Statement of Claim that the first named Defendant was a Director of the Plaintiff Company and was also employed by it as Production Director and the second named Defendant was employed by the Plaintiff as Chief Engineer. Both resigned on the 29th January 1998 and commenced business immediately as National Linen Limited in competition with the Plaintiff. It is pleaded that the first named Defendant and the second named Defendant for the benefit of the third named Defendant had wrongfully used and will continue to use customer lists, price lists, business practices, business plans, tendering processes, product sourceing procedures and production methods all of which are confidential information and trade secrets of the Plaintiff. It is pleaded that the first named Defendant and the second named Defendant used part of their pre resignation working hours establishing the third named Defendant at the expense of the Plaintiff for the purpose of competing with the Plaintiff. Particulars are given of the seeking out and purchase of business premises, plant and equipment by the first named Defendant and the second named Defendant. It is pleaded that following their resignation the first named Defendant and the second named Defendant retained in their possession confidential information, in particular customer lists and price lists, belonging to the Plaintiff and since January 1998 have used this Information to solicit customers of the Plaintiff.

2 A Defence was delivered on the 1st of February 1999 which is a general traverse with a plea that the Plaintiff is not entitled to any relief by reason of delay in instituting and prosecuting the proceedings and a plea that the Plaintiff is not entitled to relief because of a breach of the Competition Act,1991, (as amended) namely combining with Third Parties (not identified) to share the market and directly or indirectly to fix prices.

3 An Order for the discovery of documents on oath by the Defendants was made by the Master of the High Court on the 4th of November 1999, (hereinafter referred to as the "Varied Order"). That Order was varied on appeal by the Order of Mr. Justice Kelly made on the 13th of December 1999. The Defendants were ordered within 8 weeks of the 13th of December 1999 to make discovery of all documents within their power or procurement relating to the matters hereinafter set out, such documents, as regards paragraphs a, b, f, g, and h to be limited to documents emanating from the Defendants and with liberty to the Defendants to redact from any such document confidential information relating to the business affairs of the third named Defendant, with liberty to the Plaintiff to challenge any such redaction:-

4 a A. All steps taken by the first and/or second named Defendants prior to the incorporation of the third named Defendant including instructions to Company formation agents, Solicitors, Accountants and other professional advisors and/or communications between the first and second named Defendants concerning the incorporation of the third named Defendant.

5 b B. The premises acquired by the Defendants for the purpose of the business of the third named Defendant at Bluebell Industrial Estate including any documents relating to the obtaining of finance for the purposes of the premises enquiries in relation to the finding of suitable premises and the establishment of the third named Defendants business in the said premises.

6 c C. All accounts of the third named Defendant including draft or management or audit accounts for the period of 12 months after the incorporation of National Linen Limited.

7 d D. The Statements of Account of the mobile phone accounts of the first and second named Defendants for the period of 6 months prior to the date of their resignation from the Plaintiff company in January 1998.

8 e E. The business plan of the Plaintiff company and any communication with Third Parties and internal memoranda by the Defendants relating to the said business plan.

9 f F. All documents relating to the obtaining of finance and/or loans for the purpose of funding the working capital and/or other capital requirements or the business of the third named Defendant prior to the resignation of the first and second named Defendants from the Plaintiff.

10 g G. The retainer of the Defendants or any of them of Messrs. Deloitte and Touche Chartered Accountants Dublin for the purpose of their new business.

11 h H. The retainer by the Defendants or any of them of Messrs. O'Flynn Exhams and Partners Solicitors Dublin in relation to the Defendants new business venture including the business of the third named Defendants.

12 i I. All communication by the Defendants or any of them with Micross in the United Kingdom prior to the resignation of the first and second named Defendants from the Plaintiff in relation to the purchase or lease of equipment by the Defendants from Micross.

13 j J. All communication by the Defendants or any of them during the period of 6 months prior to the date of the resignation of the first and second named Defendants with any other equipment suppliers and or providers of services in relation to the purchase of goods and/or services by the Defendants from the said suppliers for their new business venture.

14 In compliance with the Varied Order an Affidavit as to documents was sworn on the 4th of February 1999 by the first named Defendant.

15 A Notice of Motion dated the 17th of May 2000, returnable for the 3rd of July 2000 was served by the Plaintiff on the Defendants seeking various relief's by way of further and better discovery. Having heard considerable argument and submissions by Counsel for the Plaintiff and the Defendants I permitted the Plaintiff to amend the Notice of Motion so as to seek:-

16 1. An Order directing the Defendants to make further discovery without redaction or all accounts of the third named Defendant including draft accounts management and audit accounts for the period of 12 months after the incorporation of the third named Defendant.

17 2. An Order directing the Defendant to make discovery of all documents records and correspondence within their power or procurement relating to the following:-

18 a A. All correspondence with South Dublin County Council relating to the pollution control licence or the application for a pollution control licence for the third named Defendant at its premises at Bluebell Avenue.

19 b B. All documents relating to and correspondence with any other Third Parties concerning the pollution control licence for the purpose of the Defendants new premises.

20 c C. All documents relating to the establishment of a contract water charges account.

21 d D. All documents emanating from the advisors and/or agents of the said Defendants prior to the incorporation of the third named Defendant and relating to the incorporation of the said third named Defendant and/or the establishment of its business.

22 e E. All documents emanating from the advisors and/or agents of the Defendants concerning the acquisition of premises at Bluebell Industrial Estate for the purposes of the third named Defendants including any documents relating to the obtaining of finances for the purpose of the premises, enquiries in relation to the finding of suitable premises and the establishment of the third named Defendants business in the said premises.

23 f F. All documents emanating from the advisors and/or agents of the Defendants relating to the obtaining of finance and/or loans for the purposes of funding the...