Waterford Credit Union v J & E Davy

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 24 March 2020
• Neutral Citation: [2020] IESC 9
• Date: 24 March 2020
• Docket Number: [Appeal No: 2019/188]
• Court: Supreme Court

Between/

Waterford Credit Union

Plaintiff / Appellant

and

J & E Davy

Defendant / Respondent

[2020] IESC 9

Clarke C.J.

MacMenamin J.

Dunne J.

Charleton J.

O'Malley J.

[Appeal No: 2019/188]

THE SUPREME COURT

Discovery – Discretion – Implied undertaking – Appellant seeking discovery – Whether the Court of Appeal wrongly declined discovery

Facts: While both the High Court ([2017] IEHC 8) and the Court of Appeal ([2019] IECA 157) took the view that certain documents which the plaintiff/appellant, Waterford Credit Union (Waterford), had requested in the discovery process were relevant and necessary for the purposes of satisfying the provisions of O. 31, r. 12 of the Rules of the Superior Courts, the Court of Appeal concluded that discovery should be declined arising out of what was said to be a breach by the solicitor acting on behalf of the requesting party of an implied undertaking. The core issue which arose for consideration on appeal to the Supreme Court was as to the extent, if any, of the discretion which a court enjoys to decline discovery in such circumstances. There was a cross-appeal which sought to question the underlying decision of both the High Court and the Court of Appeal to the effect that the documents in question should have been found to be ordinarily subject to discovery in the first place.

Held by Clarke CJ that the proper approach of an appellate court when reviewing a decision of a lower court on issues such as relevance and necessity in the context of discovery is to decide whether the views of the courts below on those issues fell within the range of views which were reasonably open to them. Clarke CJ concluded that the Court of Appeal was in error in coming to the view that it would be appropriate to deprive Waterford of discovery of documents which had been determined to be both relevant and necessary as a means of imposing a sanction for a breach of an implied undertaking given in other proceedings in which it was not a party. It seemed to Clarke CJ that, by considering the question of relevance and necessity without reference to any of the information wrongfully deployed, a court would deprive Waterford of any litigious benefit which it might otherwise wrongfully obtain; to go further would be to impose a sanction on Waterford in circumstances where, at a minimum, the person primarily responsible for the breach of undertaking was its solicitor. On that basis it seemed to Clarke CJ that it was appropriate to consider the questions of relevance and necessity in the manner adopted by the High Court being to exclude from any consideration the information wrongfully deployed. Clarke CJ also concluded that the views expressed by the High Court and the Court of Appeal on relevance and necessity were within the range of views which could reasonably be adopted on the materials before the courts. In those circumstances it did not seem to Clarke CJ to be appropriate for the Court to second guess the views of those courts in that regard.

Clarke CJ held that the cross appeal should be dismissed on the basis that the High Court and the Court of Appeal came to a sustainable decision to the effect that the documents in question were relevant and that their discovery was necessary. In addition, Clarke CJ held that the appeal should be allowed on the basis that the Court of Appeal wrongly declined discovery. Clarke CJ proposed that the Supreme Court should make an order directing discovery of the two Irish Stock Exchange reports prepared in June 2007 and February 2008.

Appeal allowed.

Judgment of Mr. Justice Clarke , Chief Justice, delivered the 24 ^th of March, 2020.

1. Introduction

1.1 Ordinarily the private papers of any person or body are just that, private. There are, however, circumstances where a legal obligation may arise which can oblige such a person or body to make certain private papers available to other parties. In the public sector, the Freedom of Information Act 2014 allows members of the public to gain access, in certain circumstances, to documents held by relevant bodies. Certain provisions of the Data Protection Act 2018 allow persons to obtain information held about themselves by third parties.

1.2 However, in the context of civil litigation it has always been recognised that the fair resolution of civil cases may well require a party to disclose to its opponent relevant documents within its possession. While the criminal law recognises a right to avoid self-incrimination, there is no equivalent entitlement of a party to civil litigation to refrain from making relevant if unfavourable evidence available. This Court has, in Tobin v. Minister for Defence [2019] IESC 57, recently emphasised the importance of the discovery process in ensuring a fair result in civil proceedings, while also acknowledging that there can be circumstances where the process becomes so burdensome that it operates to defeat, rather than to enhance, justice.

1.3 However, it has also always been recognised that the reason why a party may be entitled to have access to its opponent's documents, often including confidential documents, is for the very specific purpose of enhancing the prospects of justice being done in the case in question. Given that very limited focus of the discovery process, it has also always been recognised that a party who gains access to documentation through the discovery process is obliged to use that documentation only for the purposes of the litigation. It is said that a party obtaining such documentation is subject to an implied undertaking only to make use of the documentation in question in that limited fashion. That principle is not in dispute on this appeal.

1.4 The specific issue which does arise stems from the fact that while both the High Court ( Waterford Credit Union Ltd v. J&E Davy [2017] IEHC 8) and the Court of Appeal ( Waterford Credit Union Ltd. v. J&E Davy [2019] IECA 157) took the view that certain documents which the plaintiff/appellant (“Waterford”) had requested in the discovery process were relevant and necessary for the purposes of satisfying the provisions of O. 31, r. 12 of the Rules of the Superior Courts, the Court of Appeal concluded that discovery should be declined arising out of what was said to be a breach by the solicitor acting on behalf of the requesting party of an implied undertaking of the type just described in previous proceedings involving a different client. The core issue which arises for consideration on this appeal is as to the extent, if any, of the discretion which a court enjoys to decline discovery in such circumstances. For reasons which I hope will become clear, that issue breaks down into a number of subsidiary issues and it is also appropriate to note that there is a cross-appeal which seeks to question the underlying decision of both the High Court and the Court of Appeal to the effect that the documents in question should have been found to be ordinarily subject to discovery in the first place.

1.5 In order to understand the issues in more detail, it is necessary to set out the procedural history of these proceedings insofar as relevant to the issues which arise on this appeal.

2. Procedural History

2.1 Waterford carries on the business of a credit union for the benefit of its members. The defendant/respondent, J & E Davy (“Davy”), is a firm of stockbrokers and investment advisors which, at the material time, is said to have held itself out as having an established expertise to advise credit unions concerning appropriate investments for their funds. Underlying this discovery application is a claim for damages brought by Waterford for financial losses which it is alleged were incurred as a result of certain investments made by Waterford in reliance on the advice provided by Davy.

2.2 It is Waterford's case that, on the basis of a contract between the two parties entered into in January 2005, Waterford acted in reliance on Davy's representations and advice with regard to suitable bonds in which Waterford could invest its monies and that, as a result, over £5 million of Waterford's monies were invested in certain perpetual Constant Maturity Swap (“CMS”) bonds throughout the course of 2005 and 2006. It is alleged that Waterford was advised and was led by Davy to believe that these were bonds which guaranteed the capital sums invested and which complied with the Trustee (Authorised Investments) Order 1998 (“the 1998 Order”). Waterford claims that it subsequently discovered that the bonds in which Davy invested its funds did not comply with the 1998 Order, did not guarantee the capital sum invested and did not provide for a definite maturity date in the future.

2.3 In the statement of claim issued by Waterford on 4 July 2011, it was maintained that Waterford would not have invested in these bonds had Davy not advised it to do so and had Davy advised it of the matters just referred to. It is alleged that Davy is guilty of wrongdoing in that regard under various headings such that Waterford is entitled to an indemnity and damages in respect of the financial losses it incurred as a result. Of particular relevance, for the purposes of this discovery application, is Waterford's claim of breach of statutory duty, to the effect that Davy had failed to comply with its statutory obligations and duties under the Stock Exchange Act 1995 (“the 1995 Act”) by failing to ensure that Waterford was furnished with all the necessary information as to the characteristics of and risks associated with the investment bonds in question.

2.4 Davy delivered a full defence to this claim on 8 March 2012. It was denied, amongst other things, that Waterford had invested in the bonds concerned in reliance on any representations made or advice given by Davy to the effect that the bonds guaranteed the capital sums invested, complied with the 1998 Order or had a definite maturity date. It...