Thema International Fund Plc v HSBC Institutional Trust Services (Irl) and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 17 October 2011
• Neutral Citation: [2011] IEHC 496
• Docket Number: [2009 No. 7819 P]
• Court: High Court
• Date: 17 October 2011

Thema International Fund PLC v HSBC Institutional Trust Services (Irl) & Ors

[2011] IEHC 496

COMMERCIAL

BETWEEN

THEMA INTERNATIONAL FUND PLC

PLAINTIFF

AND

HSBC INSTITUTIONAL TRUST SERVICES (IRELAND)

DEFENDANT

AND

THEMA ASSET MANAGEMENT LIMITED AND 2020 MEDICI AG

THIRD PARTIES

AND RELATED CASES

[2011] IEHC 496

[No. 10983 P/2008]

THE HIGH COURT

PRACTICE AND PROCEDURE

Discovery

Time for making of discovery - Extension of time - Rolling discovery - Electronic discovery - Discovery of documents held abroad - Whether balance struck between need for case to come to court with reasonable expedition and costs that might have to be incurred by greater expedition - Whether appropriate preparatory steps taken in advance of order for discovery - Whether retrieval, uploading and de-duplication of electronic documents carried out in advance - Whether steps taken to ensure timely release of documents held abroad - Whether fact that one party does not have resources for rolling discovery should deprive others of advantage of same - Cooper Flynn v Radio Telefís Éireann [2000] 3 IR 344, Framus Ltd v CRH plc [2004] IESC 25, [2004] 2 IR 20 and Telefonica O2 Ireland Ltd v Commission for Communications Regulation [2011] IEHC 265, (Unrep, Clarke J, 30/6/2011) considered - Directions given for making of discovery (2009/7819P - Clarke J - 17/10/2011) [2011] IEHC 496

Thema International Fund plc v HSBC Institutional Trust Services (Ireland) Ltd

Facts: The proceedings related to the Madoff litigation which was case managed with Kalix Fund Limited v. HSBC Institutional Trust Services (Ireland) [2009] IEHC 457. HTIE had received copies of legal advices given by Thema's lawyers. Thema sought an order requiring HTIE to assert in discovery that any documents were privileged. HTIE submitted that a company was not entitled to rely on legal professional privilege in respect of a claim brought against it by its own shareholders; that having made the relevant documents available to HTIE it could now prevent HTIE from placing any reliance on those documents; and that where legal advice was admissible in respect of issues arising between four or five parties to the same set of interconnected litigation, the Court could not preclude the fifth party from being able to reply on the documents containing such advices. It was argued by HTIE that there was no reality to it claiming privilege.

Held by Clarke J. that the Court proposed to direct a hearing as to the status of the documents in question by reference to whether any privilege that might arise in respect of legal advice given to Thema could be relied on by Thema against the other parties.

Reporter: E.F.

KALIX FUND LTD v HSBC INSTITUTIONAL TRUST SERVICES (IRL) LTD 2009 2 IR 581 2009/29/7216 2009 IEHC 457

FRAMUS LTD & ORS v CRH PLC & ORS 2004 2 IR 20 2004 2 ILRM 439 2004/18/4116 2004 IESC 25

TELEFONICA O2 IRL LTD v CMSN FOR COMMUNICATIONS REGULATION UNREP CLARKE 30.6.2011 2011 IEHC 265

COOPER-FLYNN v RADIO TELEFIS EIREANN & ORS 2000 3 IR 344 2001 1 ILRM 208 2000/4/1394

1. Introduction

2 2 1.1 In the ordinary way it would be unnecessary to give a detailed considered judgment in relation to an application to extend the time for making discovery. However, issues have arisen as to the time frame within which discovery should be made in these proceedings which have, as their backdrop, the increasing scale of discovery in modern commercial litigation which derives significantly (but not exclusively) from the production and retention of electronic data. For those reasons it seemed to me to be important to set out a number of general observations which are of some relevance in that context.

3 3 1.2 These proceedings form part of the Madoff related litigation which is being case managed together for the reasons set out in Kalix Fund Ltd & Anor v HSBC Institutional Trust Services [Ireland] Ltd & Anor [2009] IEHC 457. Parties are described and terms are used in this judgment in the same way as in Kalix. The four relevant proceedings are the Kalix proceedings, the UBI Banca proceedings, the Thema proceedings and the A.A. proceedings. Orders for discovery were made in each of the proceedings, which are being collectively case managed, which required all parties to those proceedings to make discovery, in terms which had been agreed, not later than the 14 ^th September last. When the proceedings were listed for mention in September, it was intimated on behalf of a number of parties that difficulties had been encountered in meeting the time limit set out in the orders for discovery concerned. While there was some degree of consensus that additional time ought be permitted, it was not clear as to whether the parties would be able to agree an alternative timescale within which discovery could be completed. I, therefore, gave the parties liberty to issue whatever motions they might consider appropriate in relation to the timescale for discovery returnable for the 11 ^th October. Insofar as the A.A. proceedings are concerned, it became clear that there was no material dispute between the parties to those proceedings as to how discovery should be dealt with and an order was accordingly made providing for the manner in which the parties to those proceedings could comply, within an extended period, with the orders for discovery already in being in that case.

4 4 1.3 However, so far as the three remaining proceedings (being the Thema proceedings, the Kalix proceedings and the UBI Banca proceedings, collectively the "Thema related proceedings") were concerned, there was no agreement. The formal position adopted by Kalix was that it sought to have the defence of HTIE in the Kalix proceedings struck out for failure to make discovery in accordance with the court's order. In fairness, it was conceded by counsel on behalf of Kalix that such an order would not be appropriate. Kalix accepted that some degree of latitude ought properly be given to HTIE. However, Kalix did not accept that the degree of latitude which HTIE argued for was appropriate. As might be inferred from the above, HTIE itself brought a motion, referable to each of the proceedings, seeking an extension of time for making discovery in terms which it will be necessary to set out in due course. Obviously Kalix opposed that application. The other parties to the Thema related proceedings being Thema, Thema Asset Management ("TAM") and UBI Banca adopted a position which did not, in substance, oppose HTIE's application. Thema itself sought a significant extension of time (longer than that sought by HTIE) and in those circumstances could not oppose HTIE's application. TAM did not oppose HTIE's application but sought that it be afforded a similar extension of time to any that might be granted to HTIE. UBI Banca also did not oppose HTIE's application although UBI Banca in particular proposed that there should be a form of rolling discovery to which reference will be made in due course. While none of the parties opposed rolling discovery in principle, Thema indicated that it was not in a position to comply with an obligation to make rolling discovery itself by reason of its (claimed) lack of resources and a dispute emerged between the parties as to whether the court could or should direct rolling discovery in circumstances where it might not be fully reciprocal by reason of the difficulties of Thema to which I have referred.

5 5 1.4 In summary, therefore, the real issues of controversy were as to whether Kalix was correct in its contention that the extension of time sought by HTIE was excessive or whether, as HTIE argued, and none of the other parties bar Kalix opposed, an extension of the type sought by HTIE should be allowed. Second, within the parameters of whatever extra time might be permitted, the question of rolling discovery to which I have referred arose.

6 6 1.5 However, as the backdrop to all of the issues which have arisen can be found in the increasing scale of discovery in cases involving a very large amount of hard and soft copy documentation, it seems to me to be appropriate to take this opportunity to make a number of general observations on discovery in cases of this type before going on to apply the consequences of those observations to the facts of this case.

2. Some General Observations

2 2 2.1 Much concern has been expressed in recent times about the cost of discovery in complex litigation (most commonly but not exclusively commercial litigation) which, it would appear, can nowadays typically amount to 50% of the total cost of litigation. Also, as the issues which arise in this case demonstrate, the length of time which may need to be taken in complying with discovery obligations can, in some cases, be very lengthy, thus prolonging the period until a trial can be expected to commence. On the evidence presented to me it would appear that there is every likelihood that the costs for HTIE of making discovery in this case may amount to as much as €7m. Given that there are, between the various cases under case management, six other parties (even though the burden of discovery on many of those other parties may not be anything like that which lies on HTIE) it is, nonetheless, easy to see how the total costs of discovery in these cases might well exceed €10m. Likewise, despite the fact that the parties agreed to a period of six months for making discovery, I am now faced with applications which, if allowed in full, would extend the period, within which discovery is to be made in full by all parties, for an additional period of over five months. When taken in conjunction with the fact that there was a lengthy period during which the parties attempted to reach agreement on the scope of discovery (an issue in respect of which a large measure of success was achieved) and the...