Analysis: Two new High Court judgments provide warnings to legal advisors regarding discovery obligations
Ronan Geary and Sharon Burke of RDJ LLP discuss two High Court judgments — in the latter of which they successfully acted for the motioning party — which emphasise the need for parties to make full and proper discovery, and in, particular, outline the importance for parties to litigation to preserve potentially discoverable documents once litigation is contemplated.
The first judgment, delivered earlier this month by Mr Justice Heslin in McNally -v- Molex Ireland Ltd and Molex Incorporated  IEHC 555, arose from an application by way of a motion striking out the defence, for failure to comply with an order for discovery. The plaintiff claimed there were “irrefutable defects in the discovery process” and made submissions to the effect that the defendants’ discovery process had been very deliberately fashioned to bring about a result where no documents would be furnished, preventing him access to a fair trial.
The second judgment, delivered on 30 November 2022 by Mr Justice Holland in Hurley -v- Valero Energy (Ireland) Ltd  IEHC 651, expressly considered Heslin J’s earlier judgment, and arose from an application by the defendant to dismiss the plaintiffs’ entire claim where the plaintiffs admitted destruction of discoverable documents during the currency of the litigation itself. The defendant claimed that by reason of the destruction of the documents in question, it could not properly defend the plaintiffs’ claim as it could not interrogate losses alleged by the plaintiffs.
The High Court made a number of key observations in both judgments.
Warning to lawyers
In Hurley, Holland J echoed the judgment in Rockwell Machine Tool Co Ltd -v- EP Barrus (Concessionaires) Ltd  1 WLR 693, which encouraged practitioners to take positive steps to ensure that their clients appreciate at an early stage of the litigation, promptly after any writ issued, not only the duty of discovery and its breadth, but also the importance of not destroying documents which might have to be disclosed. The judge also referenced the so-called “litigation hold” discussed by the Court of Appeal in Orla McNulty -v- The Governor and Company of the Bank of Ireland  IECA 182, where Collins J observed that it was now an overarching principle that parties should take all steps necessary to preserve sources of data as soon as they become aware of a matter which is likely to require discovery. Indeed, the judge expressly issued a further reminder to practitioners that issues of preservation should be addressed once litigation is contemplated, and certainly once it has been commenced.
The earlier McNally judgment had also emphasised that the solicitor plays a vital supervisory role in ensuring that a party making discovery appreciates the scope of that obligation and acts accordingly and that the solicitor’s duty also extends to giving appropriate advice as to the breadth of searches that may be required in a given case, in order to reflect the breadth of the discovery order in question.
Preservation of documents
In Hurley, there was a failure on the plaintiffs’ part to preserve relevant documents with the court finding “that, whether innocently, negligently or deliberately, the plaintiffs acted in breach of their obligation, both before and after discovery was sought”. It was submitted by the defendants in Hurley that the destruction of relevant documents may impact on the fairness of a trial whether done deliberately to avoid the discovery/production of such documents, or resulting from the negligence of a litigant in failing to take appropriate steps to preserve documents.
Holland J. was particularly eager to clarify that it was incorrect for a party to assert that an obligation to preserve documentation only arises once that party became actually aware of the breadth of discovery being sought against it. He made it clear that good practice, as confirmed by The Good Discovery Guide issued by Commercial Litigation Association of Ireland, requires preservation of all potentially discoverable documents once litigation is contemplated, and certainly once it commenced.
In both cases the aggrieved parties sought to have the other party’s defence/claim struck out for failure to make adequate discovery. However, in both cases the court clarified that it was reluctant to grant this remedy at interlocutory stage save in extreme cases and that, in general, strike-out as a remedy was best considered by the trial judge hearing oral testimony on the issues. Specifically in McNally, and reflecting on his previous judgment in Ward -v- An Post  IEHC 470, Heslin J held that the power to strike out a defence is “a measure which could only be taken in cases considered to be ‘extreme’ or at the extreme end of the scale in terms of wilful and culpable refusal to make discovery was concerned and, even then, only if the court was satisfied that a plaintiff would not be able to have a fair trial or where the evidence allowed the court to conclude that there was a realistic prospect of a fair trial being impossible, due to the other party’s wilful refusal”.
Holland J expressly referenced Heslin J’s above dicta in his judgment, with Holland J of the view that, at least generally, even a “realistic prospect of a fair trial being impossible” should be left to a trial judge to decide. Nonetheless, in both cases the court found for the applicants generally and made significant orders against the defaulting parties, including orders for the costs of the motions. Moreover, in both cases the court emphasised that they had decided against the strike-out relief “with no little hesitation”, emphasising that such seemingly draconian relief was viable in appropriate cases. Moreover in McNally, the court observed that a finding of negligence ‘triggers’ the jurisdiction to dismiss the defence, but was clear that it is not simply a one-stage test, and the question of whether a fair trial remains possible must be considered. In Hurley, Holland J did observe that it was somewhat difficult to reconcile all of the authorities as to when to order a strike-out for failure to make adequate discovery and particularly the extent to which a defaulting party had to have acted deliberately. Certainly, he saw intent as one of the factors to be weighed in determining whether a party had been “irredeemably prejudiced” by the default in question.
In Heslin, the court ultimately proceeded to make an order for further and better discovery, which it believed would ensure that a fair trial remains possible, and was a more appropriate relief than either striking out the defence or directing that the case proceed on an assessment only basis. The court further ordered that the costs of the motion be borne by the defendants.
In Hurley, the court ultimately made an order against the plaintiffs that they must swear affidavits explaining better the circumstances of the destruction of the documents at issue with a view to being cross examined on same at trial, to furnish an expert report to assist with the information deficit caused by the destruction of documents as well as indicating a preliminary view that the costs of the motion should be awarded against the plaintiffs for such failures in their discovery to date. Of relevance also in the latter regard was that the plaintiffs had to file a supplemental affidavit of discovery in relation to 227 new documents during the currency of the motion. Finally, the court emphasised that as this was an interlocutory application only, it was open to the defendant to revisit seeking the strike-out remedy at the full hearing after they had the opportunity to cross-examine the plaintiffs on issues relating to the discovery at issue.
Both cases are helpful clarifications of the complicated line of authorities on the issue of precisely when a court might contemplate a strike-out remedy for failure to make adequate discovery. Certainly though (as Holland J observed) the issue of whether intent/deliberate culpability is a necessary ingredient in a strike-out application remains to be fully clarified. Nonetheless, the court in both cases demonstrated through the orders it ultimately made how seriously it views failure to abide by discovery obligations.
Of more immediate importance for practitioners is the clear message from the Hurley judgment in particular reiterating that legal advisors have a clear duty to advise clients at a very early stage of their obligation to preserve potentially discoverable documentation. Accordingly best practice for practitioners, once litigation is contemplated (or at very latest once commenced), is clearly to write to their client with detailed advice to this effect. It would also be good practice to write a “litigation hold” letter to the other party similarly reminding them of their obligations in this regard at that early stage.
- Ronan Geary is a partner and Sharon Burke is a solicitor at RDJ LLP.