High Court refuses to order costs in favour of Ryanair in discovery-related application

The High Court has declined to make an order finding that an airline should be awarded costs for a discovery-related application that had been rendered moot by circumstance, and which would potentially result in the State being liable to it for a substantial sum.

The application was brought by Ryanair in relation to an order of discovery against the State obtained by the airline in Minister for Finance and Ireland v. Ryanair Limited (2013/3286P).

The category of discovery ordered related to “all documents noting, recording and/or discussing the State’s ability and/or vires to impose a differentiated Air Travel Tax (‘ATT’) of the nature contained in Section 55 of the Finance (No. 2) Act 2008”.

Ryanair subsequently sought discovery, in March 2014, and the State initially indicated that discovery would be made within four months.

However, the deadline for discovery was subsequently extended repeatedly, as the State reportedly encountered difficulties in completing the required discovery.

The Court of Justice of the European Union issued judgment on 5th February, 2015, in Case T–500/12, Ryanair v. Commission, in which it annulled Art.4 of Commission Decision C(2012) 5037 final.

This decision resulted in the parties agreeing to stay the State aid recovery proceedings.

Ryanair’s solicitors wrote to the Chief State Solicitor’s Office on 9th February, 2015, noting that although Ryanair’s position was that, due to the Court of Justice’s decision, there was no longer any legal basis for the State aid recovery proceedings, the State’s discovery obligations in the within proceedings remained unchanged.

The State continued to seek extensions of the discovery deadline, and in July 2015 Ryanair’s solicitors wrote to the State’s solicitors, stating the understanding of Ryanair’s solicitors that counsel had “agreed that (subject to the Court) the proceedings may be adjourned tomorrow on consent to the first available Tuesday in October, on the basis that the State will state its intention to make its discovery by the end of October and that Ryanair may issue its intended motion (for a peremptory Order against the State compelling it to make its discovery by the end of October) seeking a return date for the first Tuesday in October”.

Delays continued, and on 1st December the State wrote to Ryanair, explaining steps taken so far and noting that: “In the past you have referred to the possibility of bringing motions against the Defendants to compel discovery. Bringing such a motion now would considerably slow down the State’s discovery rather than accelerating it.”

On 3rd December 2015 Ryanair issued a notice of motion seeking either an Order pursuant to the terms of Order 31, Rule 21 of the Rules of the Superior Courts, that (1) the State’s defence be struck out and judgment entered for Ryanair; or (2) the State should not recover the costs of, and occasioned by, the making of discovery, regardless of the overall outcome of the proceedings between the parties.

In the end, discovery was made by the State the day before the matter came before the Court on 12th January 2016.

The High Court observed that although this application was concerned with the State’s behaviour, it was worth noting that Ryanair “has not exactly showered itself with glory when it comes to discharging its own discovery commitments”.

Returning to the State’s actions, the Court noted that the State had expended considerable time and effort in satisfying its obligations, but had encountered a number of difficulties.

These included resource constraints, as “litigation is presently so expensive that even central government has now come to court pleading resource constraints”.

The Court observed that: “Inordinate costs are not a necessary price for the achievement of measured justice. The two need not travel together. But for now they are often encountered in company and, for so long as they are, resourcing issues – whether of a type that the State has encountered in these proceedings, or some other form –will doubtless, and too frequently, present in the pursuit of court-administered justice.”

The State had also encountered methodology discussions, file reviews in a number of different departments, the review of over 50,000 records, assessment for privilege and checking for confidentiality.

Excluding the cost of solicitors and counsel, the final cost to the State of the making of discovery and the production of documentation will be around €300,000.

The Court concluded that all in all, the State had devoted considerable time and money to compliance.

The Court outlined Order 31, rule 21 of the Rules of the Superior Courts (1986) as amended as providing that if any person fails to comply with any order, they may have their action dismissed, or have their defence struck out.

The Court then turned to three cases raised by the State as identifying the nature and extent of the powers enjoyed by the Court under Order 31, rule 21, namely Mercantile Credit Co. of Ireland v. Heelan 1 I.R. 81, Murphy v. J. Donohoe Ltd. 1 I.R. 123, and Radiac Abrasives Inc. v. Prendergast (Unreported, High Court, Barron J., 13th March, 1996).

In Mercantile Credit Co. of Ireland v Heelan, the Supreme Court found that O.31, r.21 should only be used in cases where there was a deliberate and wilful refusal to make discovery.

The case of Murphy v J. Donohoe Ltd. was largely supplementary to the Mercantile Credit case, but further noted that cases where a defence could be struck out would have to be “extreme cases”, that acting on legal advice would be a mitigating factor counting against striking out, and that an offer of further and better discovery was a mitigating factor.

Finally, in Radiac Abrasives Inc. it was noted that: “If there were deliberate concealment in the course of discovery, the proper remedy would be to order a strike-out. ‘A party to proceedings who has deliberately concealed documents in its discovery cannot, when it has been found out, be allowed merely to amend its discovery.’”

Drawing on these cases, the Court observed that it would be difficult to avoid concluding that O.31, r.21 was “all bark and next to no bite”.

In the present case, the Court found that there was no wilful default on the part of the State, that this was not a case where Ryanair would not be able to have a fair trial as discovery had now been made, and that the State had acted on legal advice and at all times been open to the Court and Ryanair with regards to progress made.

“Lastly, the gap between when discovery was made by Ryanair (end-November) and the State (start-January), with the end-of-year holidays coming in between is such that it is difficult to believe the extra five or six weeks taken by the State to make discovery can have had much if any effect on Ryanair or on the overall pace of the proceedings.”

As to the second order sought by Ryanair, the Court doubted whether such an order had ever been issued by the courts, and saw in such an order “the potential to wreak so gross an injustice that the court cannot conceive of a circumstance in which such a form of order would ever be made”.

It appeared to the Court that the fairest way of dealing with the issue of the costs of Ryanair’s now-moot application was to reserve them for the trial judge to adjudicate upon following the trial of the substantive dispute.

  • by Rachel Killean for Irish Legal News
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